Rising business confidence evidenced by more jobs, abundant liquidity Asia’s real-estate investment market has seen encouraging growth in terms of the total value of sales this year and the second half of 2010 thanks primarily to the abundant liquidity and continued inflow of capital, a study by Collier International showed.
In anticipation of further economic growth in the region, business confidence as demonstrated by positive hiring expectations has strengthened further.
Real-estate occupiers engaged in intra-regional trade and buoyant financial services sector were the key end-users underpinning the leasing demand during the period.
In addition, with expectation of growing inflationary pressure, more end-users took a forward-looking strategy for their real-estate plans, including consolidating and upgrading their business address.
As such, real-estate rentals picked up additional momentum in the second half of 2010.
In particular, centres with higher exposure to financial industries grew at a faster-than-expected pace during the period. Underpinned by the continued catch-up of rentals and the sustained low cost of capital, buying interests for quality real estate remained keen in the second half of 2010. According to our research, the total volume of real-estate investment sales transactions increased more than 44 per cent during the second half of last year.
The investment market sentiment in Thailand in the second half of 2010 was boosted by the much-anticipated sale of Carrefour retail stores to Big C.
However, the overall market situation remained down in terms of foreign participation due to simmering political unrest and legal impediments for foreign investment in real estate that continued to hinder buyers.
Thailand’s benchmark interest rate rose from 1.25 per cent to 2 per cent over the course of the second half of 2010 on the back of inflationary concerns. Further rate hikes are expected, which could start to impact real-estate investment as an alternative to cash and fixed income.
Meanwhile, the need to acquire land has been a major impetus, especially for residential development and land banking around future mass transit stations. The development of new lines over the next ten years will have a significant impact on the real-estate market in Bangkok.
The resolution of the Map Ta Phut impasse has re-ignited interest in industrial investment.
With its central location, Thailand provides good potential for future growth, especially along the Eastern Seaboard. The situation with Map Ta Phut and the political problems have had little effect on medium-scale investment, especially in the automotive and electronic sectors.
Three property funds listed on the stock exchange in the second half of 2010 raised a total of US$134.46 million (Bt6.56 billion). In January, the Dusit Thani Freehold and Leasehold Property Fund, with a total value of $134.19 million, was listed on the stock exchange.
However, such funds could be a thing of the past, as Thailand is in the process of adopting real-estate investment trusts (REITs) as an alternative and more flexible method, which could generate greater institutional foreign involvement in the country’s real-estate market.
Meanwhile, though China continues to constitute the majority of the total volume of real estate sold, Southeast Asia and Austral-Asia are actually the two outstanding spots in terms of percentage growth.
In Southeast Asia, office sales posted a quantum leap of more than 300 per cent due to the hectic activity in Singapore, which was highlighted by the sale of DBS Towers One and Two by Goldman Sachs to Overseas Union Enterprise for a total of $676.1 million. Another market focus was the portfolio renewal and expansion by REITs. In October 2010, K-REIT Asia acquired a one-third interest in Marina Bay Financial Centre for $1.11 billion. A month later, Suntec REIT also took a one-third interest in the financial centre for $1.16 billion. (The Nation)
