APAC to lead global commercial property rebound

Published 09th Jan 2010

Asia-Pacific economies such as China and Australia will likely lead the next phase of global commercial real estate recovery, PRUPIM, the property investment arm of insurer Prudential, said on Thursday.

"The long-term outlook for the region remains intact and increasing numbers of investors believe that now is an opportune time to tap into market recovery," Paul McNamara, PRUPIM's head of research, said in a report.

He expects occupier demand to recover in some Asian nations, lifting rents in markets such as Hong Kong and Australia, while an oversupply of offices in Singapore and Japan is likely to cause ongoing short-term rental falls.
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"The worst of the commercial property downturn in Asia-Pacific has now passed, replaced by a rebound in asset prices of sufficient magnitude to raise concerns about overheating in a few markets," McNamara said.

Commercial real estate values worldwide generally lagged the UK market's sudden recovery in mid 2009, but the worst now appears to be over for most countries, PRUPIM said.

The company, which has about 14 billion pounds invested in properties globally, also warned of further rental falls in North America, the epicentre of the global financial crisis.

"The outlook is bleak for tenant demand in the short term but we seem to be approaching price stabilisation in the US and Canada after large falls in values in 2009," McNamara said.

In Europe, investors are expected to remain selective, in particular avoiding secondary assets in weaker economies such as Ireland and Spain.

Overall, the global recovery will unfold at various speeds in different markets, but a common theme will be that demand will initially return to well-located, prime and well-let assets, McNamara said.

Source: ' Reuters '

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