China heading investment in the Asia-Pacific

London has been the safe haven for foreign investment during the previous years, in particular the last three years. During these years, the majority of investment has come from China. Now China is leading investment in Asia-Pacific commercial properties, totaling to 4.2 trillion dollars in 2012 resulting from economic growth that drove up capital values and in turn supported new construction.  

300 billion dollars’ worth of commercial property has received investment across the region of the Asia-Pacific, which is an 8 per cent increase from the year before, 2011. China surpassed Japan to become the region with the largest market investment, which received 1.5 trillion dollars invested, increased from 1.3 trillion dollars in 2011. 

Beijing has seen an increase in the demand from tenant’s for high – quality offices, and this has therefore seen an increase in rents, which are currently at a 23 per cent increase. While in Shanghai, the rising demand for office spaces from global companies pushed some smaller companies to outer areas to achieve lower rents. The demand for higher quality space as well the general rise in demand for space, is really driving the rents up for office space in China, and now in India and Indonesia as well, and it seems that this trend will continue for the time being with there being no sign of this slowing down. 

As mentioned by Kate Burrow, who is head of the Asia-Pacific forecasting at DTZ, this investment has been driven by the increasing strength in the economic growth. In the report written by DTZ, “The Asia-Pacific region may offer the best returns but sourcing prime product can be an issue, with scarcity of prime assets a prevailing theme across the region.”

Unfortunately for Japan, there has been such a sudden increase in investments, where the value of investments in Japan only rose to 1 per cent in 2012 compared to the previous year, and this followed on from four years of the decline in investment. Australia compared better, which increased by 3 per cent in 2012, following from a previous increase of 7 per cent the year before. Europe has seen an increase of 3 per cent, whereas in North America, there was a decline in investment of 0.5 per cent, which has seen very little development and deteriorating values.

Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.