Emerging Asia Property Market is Still Strong in Retail Tenant Demand While
Developed World Market Continues to Suffer Financial Woes
HONG KONG, July 31 /Xinhua-PRNewswire/ -- The latest RICS (Royal
Institution of Chartered Surveyors) global commercial property survey shows
falling of tenant demand at a faster pace in the developed world in the
second quarter of 2008. Tenant demand fell across all property sectors in
the developed world. The retail market seeing the weakest tenant activities
in the developed world, a pattern mirrored across most developing markets
outside Emerging Asia where demand strengthened. Transaction volumes and
capital values plummeted as the commercial property market suffered under
financial liquidity constraints, says the RICS Global Commercial Property
Survey, published today (31 July 2008).
Over 17% chartered surveyors reported a fall than a rise in tenant
demand across the globe as the effect of the credit crunch deepened. The
worst hit areas were North America, Australasia and Western Europe and to a
lesser degree Developed Asia. In Western Europe, the net balance of
surveyors reporting a fall in tenant demand fell to -27 percent from -22 in
Q1, while in Australasia and North America it fell to -35.5 and -36
respectively. All sectors suffered with the retail market the most
depressed area and the office sector dropping to a further low. Growth in
purchasing activity continued its downward spiral with all regions outside
Latin America either stagnating or declining. The weakest investment
markets were seen in North America, Australasia and Western Europe. Of the
more than 50 countries surveyed, 7 of the 10 worst performing countries are
located in Western Europe with the most negative sentiment towards prices
for Q3 expected in the Republic of Ireland and Spain. Hungary, New Zealand
and South Africa were also found in the bottom 10 with the US only one
place above the bottom 10.
Strongest Growth found in Middle East Regions
Office and retail rental prices experienced negative growth for
Developed Asia while Middle East recorded the highest percentage growth in
the past three months. The same trend prevails for capital values of office
and retail properties in both Developed Asia and Middle East.
Hong Kong remains the No. 1 choice for investors
Among 10 countries / cities in Developed Asia, including Singapore,
Japan and Korea, Hong Kong is the only city with positive investment bidder
demand while all the other regions reported negative demand in Q2.
Looking in investment yields, Hong Kong ranked the third among the 10
regions with New Zealand ranking No. 1 and Japan ranking No. 2 in the same
category. While quantity of development in the pipeline was measured, Hong
Kong ranked second place right behind Singapore with the rest of the
regions recorded minimal growth and negative growth. A rise in yields was
recorded in emerging markets for the first time in the survey's history as
aggressive inflation fighting in some emerging market locations has
impacted upon commercial property pricing.
Weaker occupier demand has led to further rises in available space in
the developed regions whilst declines in available space have now abated
across emerging regions for the first time in the survey's history.
Major comments from contributors in Hong Kong and China
Benedict Ma of Knight Frank in Hong Kong commented, "The focus of
leasing activity will likely be on Kowloon over the second half of the
year, in areas such as Kowloon Bay and Kwun Tong, due to the completion of
some 3.3 million square feet of new grade A office buildings in the areas.
While rental growth will likely maintain on an uptrend due to low vacancy
and continued economic growth, the rate of escalation will likely
moderate."
Robert Walker of Macuarie Real Estate Asia Limited in Beijing said,
"Olympics hosting means activity will be restricted. End of year will see
more activity."
James Macdonald of Savills in Shanghai said, "Supply volumes in the
Shanghai office market are expected to continue rising in the second half
of 2008 forcing up vacancy rates and suppressing rental growth. Despite the
office market looking as though it has come to the end of its late upswing
and into its early downswing, investment demand for investment grade office
properties remains strong."
For more information, please contact:
Ms Belinda Chan or Ms Katherine Chow
Tel: +852-2372-0090
Fax: +852-2372-0490
Mobile: +852-9379-3045 or +852-9256-3223
Email: belinda@creativegp.com or kat@creativegp.com
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[Via Real Estate Newswire]
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