Asia emerging as new property hotspot

It may well be that problems within Europe are forcing European and American real estate investors to look elsewhere but there is no doubt that interest in the Asia-Pacific is growing. Indeed according to Jones Lang LaSalle, a property consultancy, 2013 looks like being the strongest year for deals in the area since 2007. The total invested in real estate in the region in the first nine months of the year has reached an incredible $90 billion. This in itself is a 25% increase on the same period last year and experts believe there is much more to come!

So, where is all of this real estate investment coming from and why is Asia one of the new hotspots in the global property market?

Growth in emerging markets

The economic situation in Asia is nowhere near as bad as that in Europe, a situation which has been compounded by the troubled euro. It therefore seems as though Asia is emerging as a very strong economic outpost that is attracting the attention of European and US real estate investors. Indeed while US investors accounted for around 50% of transactions during 2013 so far, UK and Dutch investors each represent a further 11%.

Quote from PropertyForum.com : “If you look at the basic figures in relation to Chinese property prices you will see a 9.1% year-on-year increase in September against an 8.3% year-on-year increase in August.”

There have been enormous changes with regards to economies and cultures across Asia and indeed news this week that China is looking to lift the one child one family ban is a perfect reflection of the changing environment. As a consequence, we are likely to see massive investment within the business arena which will help to fuel demand for real estate across Asia.

Specific real estate hotspots in Asia

When you bear in mind that transaction levels have increased in Asia every year from 2009 it will probably come as no surprise to learn that cities such as Hong Kong, Singapore, Beijing and Tokyo are grabbing the vast share of overseas investment. Indeed many of these cities have jumped up the league table for the most active real estate markets and, if feedback from the international arena is anything to go by, there is still a lot more to come.

What is slightly different about the ongoing rise in real estate prices across Asia, compared to years gone by, is the fact that while US and European investors are heavily involved there is also a major presence from local investors. Pension funds and sovereign wealth funds from within Asia seem to have found a renewed appetite for real estate in the region with a long-term investment view in mind. So we have a mix of overseas and local investors, we have economies which are emerging from the worldwide economic downturn and we have changing culture in areas such as China, a perfect scenario for further economic and real estate price growth?

Conclusion

Some may argue that specific ongoing problems within Europe have forced many investors to look to areas such as Asia but the fact remains that economies in Asia are performing much better than their European counterparts. It is also interesting to see a significant inflow of local investment funds with pension funds and sovereign wealth funds featuring heavily in recent real estate transactions. Experts believe there is still significant upside in the short to medium term and indeed cultural changes in the region offer even greater long-term attractions for real estate investors.