Atrium, Crosby sales among top 5 Asia-Pac deals in Q2

August 19, 2008
Atrium, Crosby sales among top 5 Asia-Pac deals in Q2
But DTZ says S'pore commercial property sales in Q2 fell 24% from Q1
By KALPANA RASHIWALA

INVESTMENT sales of property in Singapore slowed in the second
quarter of this year, but the sales of The Atrium @ Orchard (US$617
million) and 71 Robinson Road (on the former Crosby House site) for
US$547 million made it to the list of top five commercial real estate
deals in the Asia-Pacific region in the second quarter of 2008,
according to DTZ Research's Q2 2008 Asia Pacific Investment Brief.

Total transaction value of commercial real estate across Asia-Pacific
was about US$19.6 billion in Q2, a decrease of over US$2 billion or
10 per cent from Q1 2008 and down a bigger 43 per cent or almost
US$15 billion from the peak in Q3 last year, DTZ's numbers showed.

With the global economic outlook remaining uncertain, transactional
activity in the region is expected to stay subdued. However, with
many international investors looking to Asia as the engine of growth
over the next 18-24 months while the US and European economies slow,
this should ensure that capital continues to flow into the region to
supplement the already-high levels of liquidity and equity that exist
in many markets in Asia-Pacific, the property consulting group said.

'Those economies that are the most open and have the greatest
exposure to markets in the US and Europe are likely to be most
affected,' DTZ said.

Transaction values in the four largest markets of Tokyo, Singapore,
Hong Kong and Australia have dropped markedly over the last three
quarters from a peak of over US$27 billion in Q3 last year to just
under US$15 billion in Q2 2008.

For the Asia-Pacific region as a whole, DTZ noted that despite
declines in transaction values, activity is still well above the long-
term average for the region. It is expected to remain so through this
year as investors remain committed to increasing their exposure to
Asia-Pacific,' the report said.

As the global economic outlook remains uncertain, DTZ expects
transactional activity to remain subdued. 'However, we are unlikely
to see the significant decline in activity or values that have been
seen in other markets around the world, most particularly in the US
and UK, although there could be isolated incidents within Asia-
Pacific,' DTZ added.

The US$1.5 billion sale of Resona Maruha Building in Tokyo was the
biggest transaction in the Asia-Pacific in Q2 2008, followed by the
US$1.1 billion sale of Shinsei Bank Building (BR), also in Tokyo. In
third position was the deal for The Centre in Shanghai (US$639
million), followed by The Atrium @ Orchard and 71 Robinson Road in
Singapore.

DTZ's numbers on commercial real estate cover office, retail,
industrial, mixed-use, healthcare, educational property and
infrastructure such as carparks.

For Singapore, the value of such real estate transactions fell 24 per
cent from $5.9 billion in Q1 2008 to $4.5 billion in Q2.

CB Richard Ellis executive director Jeremy Lake said that investment
sale deals in the Singapore commercial property sector (office and
retail) for the second half of this year will likely be less than the
level achieved in the first-half.

'Even though there are quite a number of property funds and
institutional investors with money to spend, the volume of deals is
slowing down,' he said. 'In the retail property sector, traditionally
the deal flow has been poor as there have been few sellers. In the
office sector, there are some sellers, but there's often a price gap
of 10-20 per cent between buyers and sellers.'

Buyers of Singapore office blocks have been adopting a more cautious
stance more recently due to a combination of concerns over an
increase in supply as major office developments are completed from
2010 onwards and an element of uncertainty over whether companies
will continue to expand at the same pace, Mr Lake added.