Commercial sales fall as demand for stock bites

Sydney CBD office space continues to be highly sought after.

Commercial property sales in Australia fell nearly 60% in the first quarter of the year after a stampede to buy assets caused a shortage of stock across the Asia-Pacific region, according to ­researcher Real Capital Analytics.

The value of completed transactions in Asia-Pacific fell 21% to $US22.6 billion ($30.7bn) in the three months to March compared with a year earlier.

Sales of income-producing buildings in Australia fell 59% to $US1.8bn, while Singapore and South Korea also felt the pinch, the researcher says.

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The top three markets of Japan, China and Hong Kong also recorded weaker investment after the buoyant turnover of the same period in 2016.

“Investors covet good ­income-producing assets in the current low interest rate environment, so pricing is keen when a property comes on to the market,” says RCA’s senior director of ­analytics for Asia-Pacific, Petra Blazkova.

In Australia, where the ­Reserve Bank cut the interest rate twice last year, investors were forced by the acute shortage of stock to adjust to a “new norm” in prices, she says.

The number of property transactions in Australia fell 65% over the 12-month period

“The mismatch in pricing ­expec­tations of buyers and sellers is another key factor in the generalised market slowdown,” Blazkova says.

RCA found Sydney had slipped to 10th spot among the ­region’s most active investment markets, and Melbourne to 18th.

The two recorded about a third of the investment volumes of a year earlier, when they ranked fourth and eighth ­respectively, RCA says.

The number of property transactions in Australia fell 65% over the 12-month period, while average net initial yields for grade A office buildings fell by 10-15 basis points to 6.5% over the quarter.

The shortage of investment stock contributed to the rise in development site sales, which rose 41 per cent across the region to $US108.8bn for the first quarter, nearly five times the value of investment assets, RCA says.

China saw 32,000ha of sites change hands last year with a 5% increase in land sales in the first quarter, RCA found.

Vanke, China’s most acquisitive developer, bought just over $US72bn worth of land in the past decade.

The two largest site acquisitions by mainland Chinese ­developers were in Hong Kong, the analysts say.

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