In a research note, real estate consultancy Jones Lang Lasalle (JLL) said Asian private equity, sovereign wealth, and pension funds besides insurers could continue acquiring prime assets which offered stable rental income.
"There will be more portfolio and enbloc deals in the second half of 2010 as investor confidence bounces back. However, further interest rate hikes that are expected across the region may have a negative impact on buying sentiment.
"Overall commercial investment volumes are expected to increase by 30% to 50% this year," JLL said.
The combined impact of improving business confidence, besides better employment and credit conditions has created a conducive property investment market in the Asia Pacific.
According to JLL, the spotlight has fallen, mainly, on land and residential properties in Singapore, Hong Kong and China. Commercial property transactions rose 15% in the first quarter of 2010, compared to the 43% expansion in the similar period a year earlier.
In China, foreign funds such as Morgan Stanley, Macquarie Group, and Goldman Sachs were selectively selling their Chinese property holdings in the past year, capatalising on a rebound in prices, especially, in the residential market. Meanwhile, mainland Chinese and local investors continue to show interest in Hong Kong.
Policymakers in China are embarking on serious measures to curb a potential real estate bubble in the major emerging economy. Home prices in China have gone up so much with no sign of easing anytime soon, making property prices less affordable for the general public.
This has led the central government to initiate tighter credit policies and more tax levies to deter speculators from driving property prices higher. According to the National Bureau of Statistics, China’s urban property prices rose 11.7% in March, the biggest annual gain since July 2005.
Lawmakers have indicated that second-home buyers seeking credit must fork out at least a 50% downpayment, up from the previous 40%.
Real estate developers were ordered not to take pre-payments from buyers for uncompleted residential units without official approval.
Lawmakers are also deliberating on the idea of forbidding insurers to park their money in residential and commercial properties, and undertake property development.
The Australian commercial property market had also remained robust in the first quarter of 2010, registering strong demand from both domestic and Asian investors.
JLL said the withdrawal from direct overseas markets by some Australian investors was likely to leave only about half a dozen Australian investors with an overseas platform.
"Australia’s superannuation funds could start to look at the global REIT (real estate investment trust) sector," JLL said.
The real estate market in Australia was recently dragged into the spotlight after lawmakers initiated measures to curb property ownership by foreigners, blamed for pushing up real estate prices there.