An unexpected source for economic recovery hopes in New-York City and London (pictured on right) has emerged this week, as reports of a rapid increase in Asian ownership of properties in prime locations around the two metropolises are published in various media outlets.
Investors from mainland China and Hong Kong have been bidding like crazy on top-notch properties around London, including but not limited to luxury apartments in the fashionable Knightsbridge district and new homes near the Canary Wharf financial district. Foreign ownership in the city, previously lorded over by cash-loaded investors from Russia and the Middle East, has already been overtaken in volumes by mainland Chinese, representing the shift in global wealth and on the lookout for trophy assets. The Chinese, who until last year represented less than 1% of London’s foreign property buyers, are now accounting for 5%, at approximately 1 million GBP, and the numbers are still on the rise, according to Savills, an international real estate agency. As a consequence, prices are being pushed upwards, a much needed boost for Britain’s struggling economy.
Unlike their Russian and Middle-Eastern counterparts, however, Chinese and Hong-Kong based buyers seem to have no burning desire to live in these properties, it would seem, but are merely seeking a safe haven from rising property prices in their home countries, as well as tougher restrictions and cooling measures previously levied by local governments, with more of the same anticipated in coming years.
In New-York city, however, things are quite different- as many Asian buyers there are taking advantage of the USA’s visa grants and legal entry permission, both of which come with investments of over 1 million USD. Wealthy families wish to secure living arrangements and legal resident status for their children, many of whom will receive education in the USA, as is the tradition in affluent Asian families.
Vantone, a billion USD Beijing real-estate firm, was the second tenant to lease space at Ground Zero’s One World Trade Center. The old AIG Insurance Company buildings were purchased and then sold by the South Korean company Young Woo. Here, in similar fashion to London, the purchases are more than welcome, as the country struggles to recover from recession, and is in grave need of the Asian capital flowing in. India and Singapore also hold an ever increasing presence in the big apple’s foreign property purchase markets, with billions of dollars being pumped into the city by rich families, as well as companies, who purchase office buildings in Manhattan and midtown, in order to have an active presence in close proximity to one of the worlds top financial capitals.
Taiwan Commercial Market Surpasses India, Malaysia & S.Korea
One of the bigger surprises in up to date 2Q-2012 figures is Taiwan – who ranked sixth among 10 major Asia-Pacific markets in commercial real estate investment turnover, according to a report on capital markets. The country’s commercial property sector reached 33.8 billion NTD (1.13 billion USD), an astounding 470% (yes, you read it right!) from the previous quarter, according to the report published by CBRE Group Inc. The top five commercial RE destinations, as usual, were China, Japan, Hong Kong, Australia and Singapore- but Taiwan’s stellar takeoff has surpassed huge central Asian markets such as Malaysia, South Korea and India. Domestic insurers accounted for 61 percent of the total investment in Taiwan’s commercial real estate sector. (Pictured below- “Taipei 101” in Taipei, Taiwan’s capital- arguably, the world’s tallest building).
* As previously predicted, India’s property boom seems to have come to a sad end, at least temporarily, as the country’s latest figures show that the country’s real estate market growth is the slowest in six years, reports Jones Lang LaSalle Inc. With no end to the country’s corruption, money laundering and unreported earnings in sight, the situation doesn’t seem to be heading for any positive change – the next 12 months, at least, are expected to be very rough for Asia’s ex shooting property star.
* Japan offered the strongest indication yet for the potential end to its 2-decade long deflation, as the government’s assessment of mid-year economic forecasts predicted- a prediction that may assist the central bank of japan to implement policy easing, which in turn may nudge market prices higher, and provide support for prime minister Noda’s decision to hike sales tax up to 10% by 2015. Indications that property prices are about to rise, such as falling vacancies in the country’s metropolitan centers, have already sent flocks of investors large and small to the country since mid-2011, a trend that has only intensified in recent months, with a large number of REITs established in the land of the rising sun.
* The world’s best acquisitive REITs, however, can be found not in Japan, but rather in Singapore- the city-state’s $38 billion REIT market has returned an average 37 percent in 2012- double the gains in the U.S., U.K. and Japan, according to data compiled by Bloomberg. Australia, the largest REIT market in the Asia-Pacific region with $86 billion, advanced 24 percent.