Real estate investment in APAC region up 12%

The Asia Pacific region drew about 11 per cent of the $457 billion invested in real-estate worldwide in 2004, which was up 12 per cent year-on-year.

According to a report published by property management firm Jones Lang LaSalle (JLL), the region attracted about $48.3 billion last year, which was an astounding 74 per cent increase in investment over 2003.

Around 24 per cent came from cross-border investment, which has grew by 146 per cent to reach $11.5 billion. The bulk of the cross-border activity came from North American investors who traded $5.1 billion of assets and invested a net $0.7 billion in the region.

Amongst all real estate sectors, the office space market saw most trading action, accounting for 45 per cent of all capital market flows in Asia Pacific.

The report said that the interest in Indian real estate stemmed primarily from US opportunity funds, US and UK equity funds, venture capital firms, Asian development funds and Singapore developers.

Domestic equity funds are also expected to be active investors. And current levels of interest is expected to push up the market to higher efficiency levels.

The report also identified that 60 per cent of cross border investment ($60 billion) took place region-to-region, showing that investors seeking international diversification are more likely to do so across continental boundaries rather than within their own region.

Richard Johnson, managing director of Asian capital markets group at JLL said, "The globalisation of real estate investment is more than simply an extension of booming local and regional investment markets or a theme for the medium term. we believe it is here to stay. Not only is there a vast weight of capital flowing between regions, sophisticated global investors are exerting an increasingly significant influence on local markets through competition with domestic and regional players."

The report pointed to an increasing trend in globalisation of real estate. "Service providers are positioning themselves to leverage from an increasing number of real estate players who are now operating globally. Not only are investors seeking diversification of portfolios, many countries are now following the example of the US and Australia.