Return to search

Cushman & Wakefield predicts Asia Pacific investment bottom

In its Economic Pulse report on the Asia Pacific economy and its effect on commercial real estate, the New York-based firm uses IMF findings to forecast when the investment and rental level bounces will occur on the continent.

Asia Pacific’s real estate investment markets should pick up towards the next quarter while rental levels across the continent should follow suit during the first quarter of 2010, according to a report released by Cushman & Wakefield this week.

In its Economic Pulse report on the Asia Pacific economy and its effect on commercial real estate, the New York-based property services firm cited analysis by the International Monetary Fund (IMF), which said that the continent’s overall GDP bottom had arrived.
 
While the IMF said that the global economy would contract by 1.3 percent this year, GDP forecasts across Asia have differed widely. For example, Japan’s GDP is predicted to shrink 6.25 percent while China is forecasted to grow by 6.5 percent.
“If the IMF is right, and we follow their base case scenario, then the [overall] GDP bottom is about now, and investment markets will start to pick up towards the next quarter.”

Cushman & Wakefield said that when investment activity does improve, it will be limited to smaller lot sizes and lower loan-to-value ratios and that an upswing in investment volumes would be felt towards the end of the year.
 
“Tenant demand is likely to remain on the weak side for the rest of this year as multinational corporations use this time to restack and implement real estate strategies in Asia that have long been best practice elsewhere,” the report said. “We expect the upswing in tenant demand to re-start in the first quarter of 2010.”

The firm said that rents would continue to fall this year as demand remains weak but when these bounce back it will happen in the retail and warehousing markets first and that Sydney and Shanghai are to be among the first cities to experience a turnaround.