Commercial real estate investment in Asia Pacific region during 2013 increased by 29 per cent to a record USD 127 billion despite subdued office space demand, global property consultant Jones Lang LaSalle (JLL) said.
"Economic performance remains mixed across Asia Pacific, with China recording the fastest growth in 2013. In the regional property market, 2013 was a record year for commercial real estate investment. Leasing activity remained subdued and was the weakest since 2009," JLL said.
The consultant released its Asia Pacific Property Digest Q4 2013 that tracks over 20 markets in Greater China, North Asia, South East Asia, India and Australia.
"2013 a record year for commercial real estate investment in Asia Pacific with transaction volumes reaching USD 127 billion, up 29 per cent on 2012," JLL said in the report. The previous record was achieved in 2007.
Top three markets of Japan, China and Australia accounted for an impressive 70 per cent of total activity during 2013.
When contacted, JLL India Head Research Ashutosh Limaye said the commercial (office) real estate investment in Asia Pacific have risen because of low rentals and the availability of office assets at attractive valuations.
Investors expects office rentals to rise in short to medium term, he added.
Asked about commercial real estate investment in India, Limaye said it was still minuscule at below USD 10 billion.
"The key takeaway for regional property markets in 2013 was the stark contrast between corporates and investors in regard to their commercial real estate decision making," JLL observed in the report.
The consultant noted that the investors were "very active" but corporates remained focused on cost savings leading to subdued office space demand.
Rents and capital values increased moderately in most markets and sectors, with capital values holding up better across the region, resulting in general yield compression, the report said.
Office leasing across the region remains weak, with only patchy improvement, as corporates stay focused on cost saving. Expansion demand was subdued in Q4 with the majority of activity as a result of relocations.
While annual net take up in the region was down 15 per cent y-o-y, the weakest since 2009, activity is expected to improve in 2014 as the global economy strengthens.
