Asian property returns rose last year, boosted by improvements in Japan.
Total return for the region in 2013 was 7.2%, according to the Investment Property Databank’s Pan-Asia Return Indicator. The figure is an improvement on the 5.8% recorded in 2012.
IPD said last year’s result was influenced by Japan’s improved performance of 6%, up from 3.6% the previous year.
Despite the upturn, Japan – which represents close to 50% of the Asian real estate market – was the weakest Asian market.
China (18% of the total Asian market) and Hong Kong (17%), recorded respective returns of 8.2% and 7.1%.
IPD said the “relatively weak” performance of the three markets held back the region.
In a global context, the 7.2% returns were lower than the 8.3% return recorded by IPD’s Global Annual Property Index, driven by the US and UK.
Indonesia, at 12.9%, was the strongest market in 2013, recording its fifth year of double-digit returns. Malaysia, Thailand and Taiwan also generated performances close to double digits.
Leslie Chua, IPD executive director and head of Asia, said direct real estate had outpaced consumer price inflation and achieved higher returns than long-term government bonds in all economies.
“Except for Japan, Hong Kong and Malaysia, direct real estate even outperformed equities in 2013,” Chua said.
“Real estate continues to be a good asset class, especially for asset owners whose return targets are benchmarked with inflation and government bonds.”
Retail was again the best performing sector across the region with a total return of 9.9%. However, improved performance of industrial investments in 2013 meant that retail edged ahead by just 77 basis points.
IPD’s Pan-Asia Return Indicator measures the performance of 4,172 individual assets in 254 institutional investment portfolios across Asia.
The assets in the database were worth $295bn at year end 2013, up 7.8% on 2012.