Domestic demand continues to drive real estate investment throughout Asia.

The Asian real estate investment market continued to gain momentum in the third quarter of 2009, according to research from CB Richard Ellis (Thailand) released today.

Cash rich domestic buyers continued to underpin investment activity, while foreign investors gradually emerged from a quiet first half year to look for medium- to long-term investments.

Direct real estate investment in Asia, excluding land transactions, jumped 25 per cent quarter-on-quarter to an estimated US$9.1 billion. Hong Kong accounted for the largest portion of capital at US$3.2 billion, or 36 per cent of the total volume, followed by China, South Korea and Taiwan, which accounted for 18 per cent, 14 per cent and 12 per cent respectively. However, overall transaction volume remained low in the first nine months of 2009, falling by 49 per cent year-on-year.

The third quarter saw foreign investors become more active in the region, with cross border investment jumping from a low of 6 per cent and 9 per cent of total volume in the first and second quarter respectively, to a high of 21 per cent. The amount of non-Asian capital accounted for just 9 per cent of total cross-border transaction volume, while more than 90 per cent came from within Asia.

Despite the quarter-on-quarter improvement in cross-border investment activity, overall foreign investment in the region remained limited in the first nine months of 2009, falling by 70 per cent over the corresponding period in 2008.

Investment in the Bangkok real estate investment market continued to focus on condominium projects in the third quarter, with domestic players driving demand. Sales exceeded expectations as demand for residential projects began to recover. Large, well-capitalised and listed companies launched a series of new projects but small and mid-sized companies found it hard to raise finance.

Notable transactions completed during the third quarter included major acquisitions by Bliss-Tel Public Co. Ltd and Bangkok Broadcasting & Television Co. Ltd. Bliss-Tell paid around US$4.6 million to AngKet Holding Co. Ltd for 250 units in the AngKet condominium project in Pattaya, while Bangkok Broadcasting & Television Co. Ltd spent around US$3.7 million to acquire 28 units at Star Estate @ Rama III from Eastern Star Real Estate Public Co. Ltd. Both transactions involved developers clearing unsold inventory from recently completed buildings.

Although the real estate sector generally remained quiet, three new property funds were listed on the Stock Exchange of Thailand during the third quarter. They were the MFCStrategic Storage Fund (M-STOR), Sala @ Sathorn Property Fund (SSPF) and 101 Montri Storage Property Fund (MONTRI). The three funds had a market capitalisation at IPO of approximately THB2.88 billion. These funds were trading at a level where investors can obtain yields as high as 11.68 per cent per annum. Fund managers are planning to list a further series of new property funds over the next 12 months.

SOURCE: Property Report