Global Property : Drivers of recovery

Global Property Drivers of recovery
By JLL Meghraj
Leasing activity in Asia Pacific continued to gather pace in Q4 2009, underpinned by increased domestic expansions
and relocations. Along with a slight pullback in new supply additions in Q4 2009 rents in most office markets were still
declining. Chennai and Tokyo posted the largest quarterly declines of about 7 percent. In contrast, Hong Kong and
Shanghai markets recorded positive rebounds of up to 5 percent from Q3 2009. Other markets such as Sydney and
Melbourne are likely to bottom out near current levels. Although corporate occupier conditions have improved, take-up of
office space is expected to lag the general pace of economic recovery. Except for those markets that face a large supply
pipeline such as Singapore, Beijing and cities in India, regional office markets are likely to turn the corner by the end of
2010 and return to their normal growth trend from 2011 onwards.
Underpinned by the low interest rate environment and general abundance of liquidity, investment activity should continue
to improve while yields may hold or compress in most markets. In Asia, ample liquidity in the market has sparked more
transactional activity and led to rising capital values. In particular, buoyant investor sentiment prompted prices for Grade
A property in Shanghai to jump 25 percent from Q3 to Q4 with yields compressing sharply by nearly 140 basis points.
Domestic investors are still on the lookout for undervalued prime assets in anticipation of rental growth. On the other
hand, Tokyo saw a further fall in capital values of 6.3 percent quarter to quarter, albeit at a declining rate.
Source : JLL Meghraj

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