GLOBAL - Investment Property Databank (IPD) has provided the first-ever approximation of a pan-Asian real estate index, based on pooling data from markets in Japan, Hong Kong, China, Korea, Malaysia, Singapore and Thailand.
The latest research from IPD Asia, drawing on property valuations for more than 3,300 assets with a total value of $169.8bn (€122.7bn), shows that the unleveraged local currency total return on Asian commercial real estate in 2009 was -0.2%.
However, the findings are not strictly comparable with the other IPD index results and may be subject to future revisions.
IPD employed its standard calculation methodology, but public domain input data from Asian real estate investment trusts, which often cannot be verified from source, has been incorporated, and some assumptions have been made to complete core data fields.
Kevin Swaddle, director for Asia at IPD, said: "This research is significant step in improving the transparency of the Asia real estate market, but we are still at an early stage.
"IPD's mission is to shine a light in property's darker corners. With these figures, we move from candlelight to a 40-watt bulb, but we are now in the electric age.
"With the help of Asia's investors, it should not be too long before we can light the markets with the full power of halogen."
The negative headline total return for 2009 consisted of a -5.4% capital return and a 5.5% income return.
The near-flat total return for the region belies a wide range of performance across individual markets, ranging from -6% in Japan to 15.4% in Hong Kong, with the former making up the largest component of the databank.
Singapore was the only other market to deliver a negative total return (-1.5%), while Thailand was the second market to produce double digits (12.1%).
Korea saw a total return of 0.8%, while China and Malaysia recorded 4.9% and 9.5%, respectively.
The Asia composite return is marginally weakened when converted into US dollars, at -0.5%, but rises to a positive 2.2% for the Japanese yen-denominated investor.
Over a three-year period, the effects of currency are much more pronounced. On a local currency basis, the total return from Asia property was 5.5% per annum, -1.1% for yen investors and 9.7% when converted into US dollars.
Based on IPD's findings, the performance of Asian real estate would rank in the lower half of the countries for which IPD published property returns in 2009, although it was better than the -7.3% local currency return of the IPD Global index.