Japan's quarterly commercial real estate sales soar 78%
Commercial real estate investment in Japan spiked a whopping 78 percent in the second quarter from the same period last year, a new report shows, in a sign that the impact of the government's radical reflating policies is gaining traction.
Asian property services firm Jones Lang LaSalle identified the world's third largest economy as one of the most thriving commercial property markets in Asia at the moment, as demand for offices, warehouses, retailers, restaurants and apartment blocks clocked up $10.2 billion of investment for the quarter, a 78 percent jump.
"In Japan, investor confidence has been boosted by improving macro-economic indicators following government stimulatory measures," said Jones Lang LaSalle.
Prime Minister Shinzo Abe's plans to radically overhaul the economy, known as 'Abenomics' involve aggressive monetary policy, fiscal stimulus and structural reform, and have so far worked to dramatically boost economic sentiment in the country.
In particular, the Bank of Japan's decision to bolster its holdings of real estate investment trusts (J-REITs) by 30 billion yen ($301.6 million) to 140 billion yen in 2013, as part of its $1.4 trillion asset purchase program unveiled in April, has provided a strong boost to the commercial real estate market, the report found.
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"This [J-REIT purchases] coupled with increased IPO activity has supported transaction volume growth," said Jones Lang LaSalle.
The report further consolidates the view that investors are turning more bullish on Japan's property market in recent months.
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In April, one of the world's largest real estate funds AXA Real Estate, the property arm of Europe's second largest insurer, said demand for Japanese commercial property was spiking, with office prices in Tokyo set to rise 10 percent over the next 18 months as Japanese corporate sentiment improves.
Strong showing from Australia, China
Apart from Japan, Australia and China also showed strong performance in the commercial property sector.
In Australia, transaction volumes in the first half of the year were up 27 percent compared to the first half of 2012, fueled by continued demand from both offshore and domestic institutional investors and pension funds, the firm said.
In China, commercial property transactions bounced back considerably in the second quarter after a slow first quarter, rising 65 percent quarter to $6 billion. For the first half of this year, transactions increased 97 percent on the second half of 2012. According to Jones Lang LaSalle, the sharp increase in commercial property market transactions was prompted by foreign investors completing a large number of deals.
Cities that are grappling with curbing measures from the government showed mixed performance. Commercial property investment in Singapore stayed resilient in the second quarter despite multiple measures by the government to cool rising prices. (hyperlink: 100854332). Transaction volumes grew 11 percent in the second quarter, compared to the previous quarter.
But in Hong Kong, where the government doubled the stamp duty on all properties valued over 2 million Hong Kong dollars ($257,801) in February, transaction volumes were down 53 percent in the second quarter, compared to the previous quarter.
Overall, commercial real estate investment in the Asia-Pacific region saw strong growth of 21 percent in the first half of 2013 year-on-year, totaling $59.7 billion. Jones Lang LaSalle forecasts transaction volumes to total $110 billion by the end of the year.
Stuart Crow, head of Asia Pacific capital markets at the firm said large global sovereign and pension funds were helping fuel the boom.
"Large U.S., Canadian and Middle Eastern investors have returned to the region and, together with active Asian high net worth and pension funds, are creating strong demand for assets across the region," he said.
—By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie