The Hindu Business Line : ‘Asia Pacific property markets entering period of slowdown’

Mumbai, Sept. 18 Most companies in India are putting their expansion plans on hold, besides seeking renewal rates and delaying upgrading facilities, according to Jones Lang LaSalle’s research.

The study, referring to India and China, says potential oversupply is becoming an issue in some parts of the region, notably in some of the Indian suburban micro markets and tier-1 cities in China. The Asia Pacific property markets, which have seen a rapid run-up in rents and capital values in recent years, is now entering a slowdown that would continue over the next 12 months at least.

Dr Jane Murray, Head of Research (Asia Pacific) at Jones Lang LaSalle, says, “In contrast to previous cycles, the extent of the downturn is expected to be moderate in most markets in Asia Pacific given the underlying sound fundamentals. The long term structural drivers and economic growth prospects will ensure that the region continues to attract an increasing share of the global real estate capital.”

“Historically, low vacancy rates and supply constraints in most markets will help mitigate the impact of a weakening in occupier demand. Tokyo has been the first major office market to move to the downturn phase of the cycle and others are expected to follow suit over the next 12 to 18 months,” Dr Murray adds.

Difficult conditions

In the retail sector, the emergence of more difficult trading conditions, combined with new supply coming in a number of markets, is likely to lead to more moderate rental growth. The sector continues to see significant structural change, particularly in the rapidly emerging markets of China and India where malls are becoming a more prominent feature of the landscape.

The industrial sector is likely to see a more muted rental growth in the short term on slowing demand due to an economic slowdown and high energy costs. However, the long-term drivers are in place namely the increasing need for quality logistics facilities to support increasing trade and domestic consumption and the growth of business parks with Asian countries moving up the value chain, the study added.

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