Vendors drop prices of Asia-Pac commercial properties

Source : Business Times - 26 Aug 2008

These assets have been priced down by 25-100 bps in last few months: DTZ

COMMERCIAL properties in the Asia-Pacific region have been priced down by 25-100 basis points in the past three to four months, more in line with investor expectations, property firm DTZ said yesterday.

Reality check: The re-pricing of commercial assets has been greater in some markets, such as Tokyo (left) and Aussie cities

‘The number is an average figure - it varies from market to market,’ said John Stinson, DTZ’s regional director for sales and investments and capital markets for Asia-Pacific.

Mr Stinson, who was speaking to reporters at a seminar, said the re-pricing has been greater in some markets, such as Tokyo and Australian cities.

For Singapore, it is hard to pin a number to the drop in the asking prices for commercial properties, mainly because of a low number of transactions, he added. But some sellers have marked down their commercial assets about 10 per cent, said Shaun Poh, DTZ’s senior director for investment advisory services and auction in Singapore.

Mr Stinson identified Singapore as one of the ‘gateway cities’ that international investors will look at when increasing their exposure in the Asia-Pacific area.

‘In the next two-three quarters, core (prime) products in gateway cities - Hong Kong, Singapore, Tokyo and Sydney - will see some interest,’ Mr Stinson said.

In Singapore, the opportunities for investors are increasing as vendors price their assets lower, he noted.

DTZ’s executive director and regional head for consulting and research Ong Choon Fah said: ‘Owners are a bit more realistic now than they were previously.’

Right now, there are still more sellers than buyers in Singapore, according to a recent survey of investors by DTZ. More than 10 per cent of investors had ’selling priorities’ while less than 5 per cent had ‘buying priorities’, the survey found.

‘Buyers are sitting on their hands, waiting for the markets to adjust,’ said David Green-Morgan, DTZ’s Asia-Pacific research director.

DTZ’s research also showed that across the Asia-Pacific region, investors with ‘buying priorities’ outnumber those with ’selling priorities’ when it comes to industrial and hotel properties.

Mr Green-Morgan noted that investments into Singapore and the region are likely to continue to be driven by private equity.

In July, DTZ predicted that the value of investment transactions worldwide will fall to US$500 billion this year, from a high of US$730 billion in 2007 and US$600 billion in 2006.

The decline assumes that after a weak first half in 2008, there will be a relatively modest pick-up, likely to be driven mainly by the Asia-Pacific market.