Most can see the continuing disconnect between the conditions on Wall Street and Main Street combined with slow to recover residential values and transaction volumes across much of the U.S. market. Meanwhile, across most of the major markets in Asia, we are witnessing quite a different scenario with continued strong and rising markets and values in residential and more recently in commercial values.

Witness in Hong Kong, despite a slew of strong anti-speculation measures intended to cool the hot residential market, luxury residential continues to over-perform. A slew of recent measures in Hong Kong, including steep stamp duties for short-term trading and lower debt allowances have only slowed the pace of sales, but not dented the record-level rising values. At the same time, the office market is strong and retail continues as the strongest performer of all. Investment yields range between 2.5-3.5%.

In Japan, the strong yen and weak economy have weakened the foreign buying interest, although some major Asia-based funds and mainland Chinese investors continue to seek high quality assets in Tokyo. Compressed yields require the yield-driven investors to seek opportunities outside the main wards of Tokyo. A growing number of Japanese investors are seeking investments overseas, both in property and businesses, as the government is encouraging M&A activity.

Taiwan may begin to receive large-scale investment in their property sector from none other than their mainland Chinese neighbors. Investment yields at 3% and under have deterred most foreign investors, but provided there are no major policy changes, upward of US$70 billion is expected to be invested by mainland investors in the coming years.

In India, we have moved into another rapidly rising market where values have risen faster than expected. Property values are beginning to stretch past the occupiers risk tolerance levels. Domestic funds are competing heavily for leased investments in the 11-12% range and foreign funds are finding it difficult. FDI activity in the property sector has been very light, but some policy change may stimulate this sector.

In the Singapore vs. Hong Kong arena, Hong Kong residential is viewed generally as more heated. However, increased residential capital values over the last 15-18 months are holding despite strong anti-speculation measures and slower sales volumes. The new project launches with the best locations and best value pricing are still drawing crowds and selling briskly. Higher price per SF product is absorbing much slower than 6-9 months back. Commercial value expectations have risen by 30% in the last six months as closed transactions established the adjusted benchmark value of S$1600-S$1800 per SF, but most owners will only consider selling from S$2000 – S$2500 per SF. This increase in price expectation has caused the market to slow in the last quarter.

Meanwhile, investors in Asia warily watch the markets in the U.S. and Europe, but the low borrowing costs and high liquidity force them to continue betting down on property here.

-Steve Atherton, MCR

Based in Singapore, Steve Atherton is Managing Director-Asia Pacific Region for NAI Global.