The Asia-Pacific Property Market Will Decline In the Coming 1-2 Years.

Rental and capital values will turn down across most of the area on the back of slower professional and investor demand accompanied by the quick run up observed in current years.

Though many of the regional markets are apt to observe a major alteration in values, primary long term drivers and financial growth prospects should make certain that most real estate markets in AsiaPacific go back to the development phase some time in 2010 or 2011.

The research revealed that demand for office space in leading financial centers is being considerably impacted by job losses in the economic sector, and professional demand in lots of other office markets is slowing on the back of weaker financial circumstances usually. The retail and housing sectors are susceptible to uncertain retail spending and increasing unemployment, as the industrial sector will be impacted by the hold back in international trade.

Internationally, the concentrated amount of debt obtainable to fund fresh transactions has led to a sharp drop in commercial real estate transaction volumes in 2009. The most recent blow to the investment market is the run away of German open ended funds, which are now backing away from fresh purchases; however have yet to sense pressured to sell.

In the Middle East, the requirement for more equity and less debt is ensuing in a repatriation of funds back to the area. Regional capital market circumstances have diluted.

In AsiaPacific, the number of investment deals remains near to the ground. Debt accessibility persists to be tense and the bid/ask spread between sellers and purchasers is hindering deal flow, an altercation that is likely to persist over the term.

Moving ahead, yields are likely to reduce more in most markets as risk premiums and necessary rates of return have increased. Retail yields held comparatively dense in the third quarter of 2009, even though transactional proofs has been slender. Yields are likely to reduce as the gloomier retail market outlook will probable force vendors to price their assets more sensibly.

Occupancy Rates Plunge with Concentrated Spending By Multinationals

Three international property agencies look forward to Bangkok's rental market to drop by 5-10% in 2009 when multinational firms start to cut spending as their head office operations suffer under the effect of the global economic crisis.

Colliers International Thailand's managing director said command for office space; serviced apartments and retail space had dropped extensively in the present quarter as US and European multinationals were beginning to postpone business development around the world, together with that in Thailand.

"Our consumers are trying to cut their office space to save money, and a few are moving from grade A places to grade B," he said.

The occupancy rate of serviced apartments has also dropped in the final quarter of 2008, with foreign firms cutting staff or lessening allowances for their housing.

The viewpoint for 2009 in Thailand's industrial estates is alike. Multinational companies, particularly those in the auto industry, are likely to decrease investment in spreading out, and this will drag down command for industrial space.

"In our business vision, Thailand's commercial property sectors, together with industrial estates, office space and serviced apartments, will undergo a direct pessimistic impact from the global economic crisis," he said.

Jones Lang LaSalle (Thailand)'s managing director said the global economic crisis had already started to affect Thailand's property market, specially high rise housing projects and commercial projects.

As per the company's research, rental fees for office space cut down in the present quarter from an average of Bt616 per square meter per month for grade A office space earlier in 2008 to Bt600. In the meantime, office space is likely to be in noteworthy oversupply in Bangkok in 2009. Latest office buildings with a total of 200,000 square meters of floor space will be finished concurrently the new government centre at Chaeng Wattana opens its doors with 400,000 square meters of office space.

Jones Lang LaSalle also predicts dropping demand for office space as multinational firms trim costs by choosing smaller, or cheaper, floor space.