Published & Updated as on - 2010-03-04
March
3 (Bloomberg) -- China overtook the U.S. as the world’s biggest property
investment market last year and will probably keep the lead in 2010 on economic
growth and a lower reliance on debt, Cushman & Wakefield LLP said.
Real estate investment in China more than
doubled to $156.2 billion last year, while the total for the U.S. slumped 64
percent to $38.3 billion, the New York-based broker said in a report today.
Excluding residential investments, the U.S. came third after China and the U.K.
“China will continue to see vibrant investment
activity, despite recent government measures to cool down the property
markets,” Donald Han, Cushman & Wakefield’s managing director for
Asia-Pacific capital markets, said in the report.
China’s economy expanded at an annual rate of
10.7 percent in the final quarter of last year, boosted by Premier Wen Jiabao’s
$586 billion stimulus package. The U.S. property market is being hurt by high
levels of unpaid debt and a reluctance among banks to lend as they clean up
their balance sheets, Cushman & Wakefield said.
China is taking steps to rein in the real estate
market as price increases accelerate. The government in January re-imposed a
sales tax on homes sold within five years of their purchase and the People’s
Bank of China raised the proportion of deposits banks must set aside as
reserves to reduce lending. Property prices in December rose at the fastest
pace in 18 months.
Eight
of the world’s 20 largest property markets last year were located in the Asia
Pacific region, with Hong Kong, Taiwan and New Zealand registering gains in
investment, according to the report. Cushman & Wakefield is the world’s
largest closely held commercial real estate adviser.
Japanese Revival
Japan will see a revival after investment fell
48 percent to $19 billion last year, it said. Some distressed properties are
selling for less than their construction costs and average rental incomes tend
to be higher than financing costs, making the market “compelling,” Han said.
U.S. property investment will rise 50 percent
this year on falling prices and an increase in distress sales.
“Large pools of frustrated capital,” may be
attracted to well-located properties with financially secure tenants, boosting prices,
said Frank Liantonio, executive vice president of U.S. capital markets for
Cushman & Wakefield. “Distressed sellers begin to deal with a mounting
volume of properties,” he said.
In Europe, most investors are focusing on the
largest, most active markets such as the U.K., France and Germany. Investment
in the continent will probably rise 44 percent this year to $152 billion, the
firm predicts.
U.K.
prices were among the quickest to bottom out after the global financial crisis
began, with values falling 44 percent in the two years to July 31. The slide in
prices and the pound’s weakness helped revive investment and lift property
prices.
Source: www.businessweek.com
|