Credit Crisis Impacting Asia Pacific Industrial

BOSTON-New reports from Boston-based Colliers International and from the Washington, DC-based Urban Land Institute and New York City-based PricewaterhouseCoopers LLC reveal the effect of the US sub-prime mortgage crisis has finally begun to ripple through industrial property markets across the Asia Pacific region. In the words of the latter report, “Industry experts expect Asia’s day of reckoning is just around the corner,” with analysts anticipating falling asset prices, rising cap rates, deteriorating debt markets, increasing foreclosures and bankruptcies and plummeting transaction volumes over the coming year.

According to Colliers’ biannual Asia Pacific Industrial Market Overview, released Dec. 1, the growth of the industrial property markets in most Asia Pacific cities has slowed compared to the previous review period. The report, which covers 12 cities in eight countries, says the economic downturn in major economies around the world has affected demand for exports by Asia Pacific cities, which in turn has reduced demand for industrial premises and slowed new constructions.

Acquisitions have also dwindled as the uncertainties in global financial markets, tightening credit conditions and increased funding costs have dampened investor interest. According to New York City-based Real Capital Analytics, Asia-Pacific property sales plunged 68% in Q3, compared with 18% year over year through August.