China led a jump in investment in Asia-Pacific commercial properties to $4.2 trillion in 2012 as economic growth drove up capital values and supported new construction, according to London-based broker DTZ.
Investors bought $300 billion of commercial property across the Asia-Pacific region, an 8 percent increase from 2011 in U.S. dollar terms, a report by DTZ showed today. China overtook Japan to become the region’s largest market with $1.5 trillion of investments, up from $1.3 trillion in 2011, DTZ said.
Tenant demand for high-quality offices in Beijing led to a 23 percent increase in rents in 2012, while in Shanghai, rising demand from global companies pushed some companies to outer areas in search of lower rents, according to a January report by broker Knight Frank LLP. China, India and Indonesia are seeing the strongest momentum in retail consumer, developer and investor activity in the world, broker Jones Lang LaSalle Inc.’s retail real estate momentum index for 2012 showed.
“Growth in Asia Pacific-invested stock was powered by the emerging markets on the back of strong economic fundamentals,” Kate Barrow, head of Asia-Pacific forecasting at DTZ, wrote in the report. “The Asia-Pacific region may offer the best returns but sourcing prime product can be an issue, with scarcity of prime assets a prevailing theme across the region.”
The value of investments in Japan rose 1 percent in 2012 from the previous year in yen terms, following four years of declines, DTZ said. Investments climbed 3 percent in Australia, moderating from 7 percent growth a year earlier in local dollar terms, according to the report.
Europe had an increase of 3 percent, and in North America, growth in invested stock declined 0.5 percent on very limited development and falling values, it said.