Asia Pacific commercial real estate transactions estimated at US$100b in 2011

KUALA LUMPUR: The Asia Pacific market for direct commercial investments in terms of transaction volume is estimated at US$100 billion (RM296 billion) this year as investors seek shelter from the global turbulence rocking stock markets worldwide, according to international real estate firm Jones Lang LaSalle (JLL).

"Real estate is likely to be an attractive investment option in the current climate. We still have a lack of supply of good quality real estate in many Asia Pacific cities, which means that with sustained demand rents will continue to grow," said head of capital markets in Asia Pacific Stuart Crow.

Meanwhile, head of research for capital markets in Asia Pacific Dr Megan Walters said: "Real estate presents a good opportunity for investors to secure cash flows in the form of rents that have the potential to keep up with inflation. The biggest markets in Asia Pacific are China and Australia, and international investors are actively returning to Japan."

"Yields on prime office stock range from Tokyo 3.6% through to Shanghai 6.1% and Sydney 6.9%," she added.

According to JLL, it had closed a number of significant deals recently, and expects to close more deals soon.

Last week, the firm had transacted Jia Rui International Plaza, a grade A office building with 462,000 sq ft of total saleable gross floor area in Pudong, Shanghai. The building was acquired for US$294 million by SOHO (Shanghai) Investment Co Ltd, a unit of SOHO China Ltd and will be renamed SOHO Century Avenue.

Meanwhile, the firm also helped sell a Californian semi-conductor company's 568,000 sq ft assembly and testing factory in the Suzhou Industrial Park to a locally-based telecommunication equipment company listed on the Shenzhen Stock Exchange for an undisclosed sum.

"This is the largest MNC [multinational corporation] factory disposal transaction in Suzhou, one of the fastest-growing cities in China and home to more than 80 of the world's top 500 corporations listed in Fortune Magazine," said the firm.

During the last quarter, JLL had transacted US$5 billion in commercial real estate deals in China.

Over in Japan, the firm recently closed a US$70 million sale-and-leaseback deal over a high-quality IT solution facility on a 1ha site on behalf of an international IT company.

The property, which attracted foreign and local investors such as a South Korean asset management fund and an Asian private equity fund, was sold to a domestic institutional investor.

JLL also highlighted Australia as the most sought-after market by international investors due to its economy's closer links to China than to the US.

According to the firm, Australia and Singapore were the only two nations in the Asia Pacific region with an S&P AAA credit rating. In the quarter ended June 2011, the former's real estate market had attracted total direct investment volumes of just below US$4 billion, with US$1.7 billion of that from foreign investors.

The firm is currently handling Cairns Central regional shopping centre in Queensland, which it describes as a "strong trading and fully enclosed regional shopping centre" with total gross lettable area of 567,000 sq ft.

Current tenants are a department store, discount department store, two supermarkets, a six-screen cinema complex and an assortment of 174 specialty stores.

The property carries a price tag of over US$460 million for a 100% interest, said JLL.