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Owners wary of lowering prices for properties

source: The Nation August 15, 2008 A widening bid-ask spread has emerged in major real estate markets across Asia, as property owners, supported by solid market fundamentals, remain reluctant to lower their asking prices, according to CB Richard Ellis' Asia Pacific Investment Market Report for the second quarter of 2008. Although Asian markets have been affected by slowing economic growth and unsettled capital markets, financiallysound institutional investors, including pension and sovereign wealth funds, remain active across major cities in Asia, and direct commercial property transactions in Asia were up moderately yearonyear in the first half of 2008, according to the company. A number of large transactions were completed in Thailand, with the focus squarely on hospitality properties and the country's major resort markets, where investment sentiment remained robust on the back of sustained growth in the hospitality and tourism sector. Numerous hotels in Phuket changed hands, with some to be renovated and rebranded. Land transactions included the sale of a freehold plot for around Bt1 billion on Koh Siray, and CB Richard Ellis expects this trend to continue as some investors realise sizeable capital gains from holding properties for the past two to three years. Investment activity in the Bangkok property market, in comparison, was highlighted by the acquisition of a plot of land in Sathorn for Bt1.4 billion by AIA, demonstrating that investors retain confidence in the sector's prospects. Other notable transactions in the capital included the sale of multiple hotels and commercial properties. Regionally, Japan continued to attract the most investor interest, accounting for over 30 per cent of Asia's major investment transactions. Banks and financial institutions have been curbing lending activities this year in Japan. Highly leveraged investors therefore sought to reduce debt by bringing assets to the market and this resulted in a repricing of residential, suburban retail and fringe offices properties. However, asset pricing for the best located and highest quality properties remained relatively firm. Singapore's investment market turned quieter compared with the preceding year. However, financially sound investors remained fairly active and a total of Bt321.6 billion worth of investment transactions were recorded in the first half of 2008. Slower global economic growth and a volatile equity market served to cool sentiment in the Hong Kong property market, as overall investment activity was subdued during the first half of 2008

 

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