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An end to QE and the impact on real estate in Asia Pacific: JLL Comment

Economic recovery in the US will continue to benefit real estate markets in Asia Pacific as the Central Bank’s Quantitative Easing (QE) programme comes to an end

​SINGAPORE, 5 November, 2014 – The United States Central Bank has announced an end to its six-year quantitative easing (QE) programme, which sought to inject money into the US economy through large-scale asset purchases, in the aftermath of the Global Financial Crisis (GFC).

Analysing the impact on Asia Pacific’s real estate markets, Dr Megan Walters, Head of Research, Asia Pacific Capital Markets, JLL, said: “The implementation of QE programmes in advanced economies produced a significant spill-over effect on to developing markets, with strong capital flows from advanced economies. Global interest rates have been driven lower and investors have been deploying additional capital into real estate in the search for yield.”

“In Asia Pacific, these two factors created a wave of investment in real estate that led governments in China, Hong Kong and Singapore to implement regulations to cool real estate markets, primarily focused on residential property. The ending of US QE will be another step towards these governments deciding to lift or ease their cooling measures. The impact of potential interest rate rises from the end of US QE and any effect on commercial real estate yields should be off-set by the expectation of rising rents in most major office markets in the region.” 

She continued: “The weight of capital targeting real estate will continue as the global economy and, in particular, the US economy, recovers. In the first nine months 2014, the global and inter-regional capital flows of investment into Asia Pacific commercial real estate (from global, US and Europe investors) exceeded last year’s total by 35 percent. Continuing economic recovery in the US appears to be providing US and global investors with the funds to deploy in Asia Pacific and we expect that picture to continue in the medium term.” 

“Investors will continue to see core real estate as a highly attractive asset class and Asia Pacific will remain attractive as international investors continue to diversify their portfolios.”