Commercial sales fall as demand for stock bites
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.
This article originally appeared on www.theaustralian.com.au/property.