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Four Asia Pacific Cities Make the Global Top Ten of Most Traded Real Estate City Markets in Q3 2011

Equity from Asia Pacific continues to search for home in global real estate according to Jones Lang LaSalle


Four out of the top ten most traded direct real estate city markets globally in the third quarter of this year were in Asia Pacific according to Jones Lang LaSalle’s latest Global Capital Flows report. Hong Kong, Tokyo, Shanghai and Sydney and all made the top ten, compared to four in the Americas and two in Europe.

The most notable quarter on quarter change in the top ten has been Tokyo’s resumption of activity following the earthquake. The city took the number four spot with US$3.6 billion traded, up from US$0.9 billion in the second quarter of the year. Sydney was a new entry into the top ten this quarter taking the number eight spot (US$1.6 billion), Shanghai stayed fairly constant with US$1.9 billion traded (though moved up to rank fourth from eighth) whilstHong Kong moved up to third place from four last quarter with US$4.2 billion traded (over half of this total was accounted for by the Festival Walk transaction).
 
Q3 2011 Most Active Cities
 

Rank

Rank Last Quarter

City

Q3 11     (US$bn)

Q2 11   (US$bn)

% change Q3 11 -  Q2 11

1

2

London

6.9

6.0

15%

2

1

New York

4.3

6.3

-32%

3

4

Hong Kong

4.2

2.4

74%

4

18

Tokyo

3.6

0.9

284%

5

8

Shanghai

1.9

1.8

4%

6

10

Paris

1.8

1.6

15%

7

7

Washington DC

1.7

1.8

-10%

8

39

Sydney

1.6

0.5

228%

9

3

Toronto

1.6

2.7

-42%

10

15

Chicago

1.6

1.3

20%

 

 

 

 

 

 

Source: Jones Lang LaSalle
% change expressed in USD terms which may differ from % change expressed in local currency
* City-level numbers exclude portfolio deals
Jones Lang LaSalle’s latest report also found that in the first nine months of 2011US$3.4 billion of investment was made into direct real estate in Asia Pacific by investors from elsewhere globally, whilst investors from Asia Pacific spent US$4.5 billion outside of the region. 

Alistair Meadows, Director, International Capital Group, Jones Lang LaSalle Asia Pacific commented: “There are two strong themes we see emerging from investors; firstly Asia Pacific has remained an attractive destination for international capital from other regions; economic growth in the region, although slowing, remains stronger than the Euro-zone and the United States. We believe this relative attractiveness, both in terms of the region’s economies and its real estate markets, will remain over the coming months. Secondly, Asia Pacific remains a key source of capital that is looking for opportunities to invest globally. Whilst caution has affected investor sentiment due to the Euro-zone debt crisis, we expect equity-rich high net worth individuals in Asia to continue to seek safe investment havens such as London and New York.”

Direct real estate investment transaction volumes in Asia Pacific held firm in the third quarter, up 13 percent on the previous quarter and up 7 percent on the same period in 2010.

Singapore was the second largest source of cross border capital and was the most active purchaser globally in net terms. The largest net divestors were the global funds and Hong Kong investors at -$2.7 billion apiece. Both Singapore and Hong Kong’s positions were dominated by Swire Properties’ disposal of Festival Walk to Mapletree Investments for US$2.4 billion.

While the listed Real Estate Investment Trusts (REITs) were net acquirers in all regions, they were primarily active in the Americas and Europe, while in Asia Pacific they surrendered top spot to institutions. In addition, Corporates were large net acquirers in Asia Pacific(US$1.4 billion), unlike the other regions. Owner occupation is more attractive to lock-in costs or acquire suitable space, while in the other regions sale and leaseback remains a more attractive option.
– ends –


Notes to Editors
1. Jones Lang LaSalle’s Global Capital Flows analysis provides a set of data designed to help investors understand how commercial real estate capital is moving around the world. The findings are released on a quarterly basis. All of the current Global Capital Flows data can be found in interactive website which also provides access to Jones Lang LaSalle’s global capital markets research. Bookmark this site for the most up to date global real estate and data http://www.joneslanglasallesites.com/gcf

2. Definitions
• Intra-regional: Both purchaser and vendor originate from the region where the asset is located.  For instance, a US REIT purchasing in Canada, or a German Open Ended Fund selling in the UK.
• Inter-regional: Purchaser, vendor or both originate from outside the region where the asset is located. For instance, a US REIT purchasing in Denmark, or an Australian Pension Fund selling in Canada.
• Cross-border: Refers to any purchaser, vendor or both that originates from outside the country in which the relevant transaction occurs. Categorised into Inter-regional and Intra-regional transactions.
• Domestic: Refers to any investor that originates from within the country in which the relevant transaction occurs. Transactions involving both “domestic” purchaser and seller are referred to as “domestic” activity.
• Entity-level transactions, development projects and multi-family residential investment are excluded from our provisional data and may change.
• Jones Lang LaSalle converts transaction values into USD at the average daily rate for the quarter in which the transaction occurred. In other words, the foreign exchange effect has not been removed.
• Global Funds are funds which raise capital in multiple regions.