Investors pour funds into Asian real estate

The flow of capital into Asian property from outside the region is accelerating as a result of the credit crisis in the US, according to a report on the sector published on Wednesday.

Property investment in Asia grew 27 per cent to $121bn in 2007 and continues to build, says the report, which is being published by KPMG, the Asia Pacific Real Estate Association and index provider FTSE.

Investment was evenly allocated over the first and second halves of the year, unlike in Europe and North America, where investment slowed dramatically in the second half.

Most Asian markets recorded direct real estate returns above the global average of 10 per cent last year. This is forecast to continue, albeit at a lower rate.

The report comes during a period of aggressive fundraising activity for new global property funds, many of which are raising allocations to Asia to gain exposure to economies that are relatively insulated from the credit crisis. Property markets in the region, while not immune, have stood up relatively well compared with the US and Europe.

MGPA, the private equity fund manager part owned by Australia’s Macquarie Bank, this week launched a global fund that will invest mostly in Asia. It has secured $3.9bn in equity for Asian investment, giving it a potential buying power in the region, with leverage, of $15.6bn.

The fund has already committed $2.2bn to investments in Singapore, Japan, China and Thailand, and is looking at South Korea, Malaysia, Taiwan and Australia. North American investors make up 40 per cent of the fund.

Asian real estate investment trusts also outperformed American and European counterparts. Credit problems and softening real estate prices in the US and Europe mean that investors are focusing more on Asia both for long-term returns and opportunistic investments, according to the report.

At the same time, banks have become more reluctant to lend for new Asian projects, which increases the bargaining power of foreign funds. But the report says this has slowed, rather than halted, the financing process.

“There’s no shortage of capital in Asia,” said Andrew Weir, one of the report’s authors. “There are investment funds that have raised money and haven’t spent it yet.”

Article Source http://www.ft.com/cms/s/0/7b13b31a-3c8d-11dd-b958-0000779fd2ac.html?nclick_check=1


By Andrew Wood in Hong Kong and Daniel Thomas in London
Published: June 17, 2008 22:33

National Survey of Real Estate Professionals Reveals Stagnating Market

NEW YORK, June 17 /PRNewswire/ -- Real estate professionals polled from around the country have expressed concern that property in the United States is overvalued.

According to the fifth annual Bryan Cave Real Estate Executives' Forecast Survey, 59 percent of the executives polled believe commercial properties are overvalued and only 4 percent consider commercial properties to be undervalued.

"The results of Bryan Cave's survey are further evidence some owners are focused on peak values of a year ago," said Jon Caplan, executive vice president of Cushman & Wakefield, a national real estate firm. "Overall, the market is awaiting more information regarding valuation. There are few recent data points. Debt is scarce, and it is not clear what the game rules will be for lending going forward. We are in a transition and transaction volume will pick up as we get more clarity."

Barry Ross, a partner at Bryan Cave, seconded Caplan's view and added that "91 percent of the executives polled by our survey believe the credit crunch will continue to reduce capital for commercial real estate financings for at least seven more months. The expectation among executives can only add to the market's woes and slow activity in the short term." To read more click here.

Posted : Tue, 17 Jun 2008 15:39:23 GMT
Author : Bryan Cave LLP