Global invested stock hits $12.1trn as Asia overtakes the US

The value of the invested real estate in Asia Pacific has overtaken that of the real estate in North America for the first time, according to the latest research by global property services firm DTZ.

In its well-regarded annual report, Money into Property, the firm said that in 2011 the total value of the invested stock – commercial real estate held by investors – was $3.9 trillion in 2011, reflective of a 13 percent increase on the value of the region’s invested stock in 2010.

DTZ said North America’s invested stock, meanwhile, remained at $3.7 trillion for the second consecutive year. The value of the invested stock in Europe, however, continued to be the highest and actually grew by 8 percent in 2011 to $4.5 trillion.

Hans Vrensen, global head of research at DTZ, said: “As forecast, Asia Pacific has overtaken North America to become the second largest region globally, with invested stock heading towards the $4 trillion mark. This growth was supported by strong domestic consumer growth in China and natural resource and other exports across the region.”

Specifically, DTZ noted that China’s properties, while still making up the lion’s share of the country’s invested stock, had seen slower growth in the year while smaller Asian markets such as Taiwan had seen significant growth. In Taiwan, the value of its invested stock in 2011 grew by 21 percent – the highest in the region. Other markets which experienced notable growth included Malaysia and Singapore. Overall, Asia’s southeast saw 16 percent added to the value of its real estate.

Despite the growth, Vrensen pointed out that Asia Pacific transactional activity was on a par with 2010 levels. Nonetheless, he said: “Asia Pacific remained the most actively traded region, with an average liquidity ratio of 4 percent.” Within that, he said Singapore was the most liquid market globally, with a ratio of 12 percent. He put that down to the activity of the state-city’s REIT sector.

Looking ahead, DTZ projected a base case scenario – which included no disorderly default in the Eurozone – that would see Asia Pacific’s invested stock continue to produce “strong growth” of 7 percent in 2012 and 10 percent in 2013. Chor Hoon Chua, DTZ’s head of Asia Pacific Research countered: “However, in the downside scenario, stock is projected to decline by 4 percent in 2012 but rebound with 6 percent  growth in 2013.”

In the report, DTZ distinguished between invested property and non-investable and/or owner-occupied property as the latter are either not available to investors or they are of insufficient quality. The firm also made the distinction with investable but owner-occupied property which is attractive to investors but is not available for investment currently.

The firm’s estimate for the total value of all global stock in 2011 was $31.2 trillion made up 39 percent by invested stock, 25 percent investable owner occupied stock and 36 percent non-investable owner occupied stock.