The first quarter of 2014 saw a slight decline in commercial investment activity as volumes excluding land totalled USD21.9bn, 2% lower than the same period a year ago and 24% lower than Q4 2013. Weakening investment sentiment in several emerging markets, particularly in the Greater China region also contributed to the drop in investment volume.
Japan remains to be the most active market and stands out as the only significant volume driver in the region. The usual rush to close deals ahead of the end of the fiscal year, combined with commencement of the consumption tax hike on April 1 pushed volumes in Q1 to USD12.3bn, a 42% increase on Q4 2013. This marks the highest quarterly transaction volume on record in Japan.
Cross border investment totalled USD2.4bn in Q1 2014, down 29% q-o-q and 4% y-o-y. This represented only 11% of total regional investment, suggesting that investors remain cautious about investing outside their own domestic markets at the beginning of 2014. Japan and Australia continued to attract the largest sums of cross-border capital into Asia Pacific in Q1. Cross border transaction volume in both countries was similar at around USD1bn.
Transactions of all the major asset classes dipped in Q1. Office dropped by 14% q-o-q but 8% higher than Q1 2013, remaining to be the most actively traded asset type in the region and accounting for 58%. Apart from the most commonly transacted office, retail and industrial sectors, Q1 2014 also saw a huge increase in transaction volume for leisure and healthcare sectors, with turnover reaching USD1.3bn and representing 6% of regional investment activity. This is the highest level in two years.
Following a record breaking 2013, the investment market in Asia Pacific has started off 2014 on a cautious note. Buoyant investment activity in Japan was largely offset by the slowdown in the rest of the region with overall volumes 2% lower than the same period a year ago. We expect caution to remain, leading to a slight fall of 4% to USD93bn for the full year 2014.
Source : DTZ (Groupe UGL)