ASIA - Real estate markets in the Asia Pacific region have fared better in the aftermath of the global recession than their counterparts in the US and Europe, according to a new report by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC).
Emerging Trends in Real Estate Asia Pacific 2010 found that both pricing and rents in the region fell steeply in 2008 and early 2009, in step with those in the West, but the markets have since lifted thanks to the resilience of the Chinese economy.
The report said the Shanghai, Hong Kong and Beijing markets have been buoyed in the second-half of 2009 by a series of Chinese fiscal and monetary stimulus measures.
As a result, many Asian real estate markets have begun to show signs of positivity, including a rebound in transaction volumes, although this is led overwhelmingly by China.
"Pricing has improved across the region. While the upturn has been modest in most cases, moves have been substantial in some asset classes and geographies, especially in China," said KK So, real estate tax leader for the Asia Pacific region at PwC in Hong Kong.
Based on investment prospect ratings, the top five markets in 2010 are Shanghai, Hong Kong, Beijing, Seoul, and Singapore.
"Chinese cities dominate the rankings this year, which is a reflection of a remarkable resurgence in Chinese commercial real estate as the government-mandated liquidity boom lifts markets across the country," So added.
In spite of a stalemate between buyers and sellers in some markets, and significant rent fluctuations, Asia has experienced both an increase in transaction volume and higher property prices - with a large part of the upturn occurring in China, the report noted.
That said, the report's authors erred on the side of caution in their outlook for the region.
"Although Asian real estate markets never reached the level of stagnation seen in the US and Europe, and the ongoing activity there is encouraging, it is important to keep the outlook for growth in perspective," said ULI chief executive Patrick Phillips.
"The idea that the recession is likely over gives rise to the widespread notion that global economies will now revert gradually to the same trajectories as in the past, which is normally what happens when recessions end," said Phillips.
"This is particularly true of Asia, which has avoided the worst of the fallout. This time, however, the aftermath is likely to be different because the imbalances that led to the global downturn remain embedded in the system and cannot be quickly eliminated," he added.