Australia and China are leading the global real estate recovery, with the Asia Pacific region set to surpass the United States to become the second largest commercial property market behind Europe, according to global real estate firm DTZ.
The annual DTZ Money into Property report has found that while growth in the United States and Europe was stagnant in 2010, the global market grew 3.4 per cent over the year, mainly due to the Asia Pacific’s 14 per cent growth in invested stock.
David Green-Morgan, head of Asia Pacific research, said this growth is expected to continue in 2011 with a further increase in invested stock of 15 per cent – bringing Asia Pacific in line with Europe at US$4.4 trillion.
Green-Morgan said this would be driven by a strong development pipeline and an increase in capital values.
Looking domestically, Green-Morgan said Australia had a strong year in 2010 with the level of invested stock in Australia rising by nine per cent in local currency terms.
The key drivers of this during the last year were a return to capital value growth, while in 2011 growth is expected to be driven by rental demand for office and industrial spaces, Green-Morgan said.
Transaction levels were also up 75 per cent from $9 billion in 2009 to $16 billion in 2010 – just short of the doubling of transaction levels experienced by the Asia Pacific region.
Green-Morgan said this was a result of investors taking advantage of value opportunities in the market that might not be seen again in the next five to 10 years.
The DTZ Fair Value index for the Asia Pacific region also scored well, measuring in at 65, which is well above the global average of 50.
Green-Morgan said that while the best opportunities had passed over the last 12 months, there were still plenty of opportunities in non-prime markets, with investors needing to be more selective.