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Massive fall in property sales in Asian real estate markets

The region experienced an 83% quarter-on-quarter fall in sales, according to the latest research from property consultants CB Richard Ellis.

Asia's industrial property sector underwent the largest drop by market segment, plummeting 95% from the same quarter a year earlier. This was followed by office and retail property transactions which slid 89% and 40% respectively.

Singapore experienced further declines in investment sales in the first three months of the year with only a few isolated transactions. Analysts said that potential buyers and investors are adopting a wait and see attitude.

Total investment sales amounted to S$204.2 million, a decline of 51.8% from the previous quarter and a fall of 97.7% from the first quarter of 2008.

The last time Singapore's quarterly investment sales were at such low levels was in the first quarter of 1998 when they stood at $49.28 million and in the third quarter of 1998 when they were $110.62 million.

In Hong Kong, institutional investment activity evaporated has evaporated, the analysis says. Property investors are finding it difficult to raise debt and equity.

However, the number of investment deals under HK$100 million and demand for first-hand residential housing units picked up considerably towards the end of the first quarter of 2009 due to several rounds of government interventions resulting in commercial banks gradually relaxing their requirements on property lending and lowering their mortgage rates.

The largest Asian transaction was in Japan with the sale of Sogo Department Shinsaibashi Store building in Osaka for approximately US$383.6 million.

But the commercial property markets in Japan and South Korea in particular, are experiencing tight lending conditions. This has resulted in an increase in inventory and decrease in overall transaction volume.

In Greater China, transaction volume remained low owing to the ongoing market slowdown and falling capital values and in Thailand, there was little investment activity as bank financing remained difficult to obtain.

The Indonesian and Malaysian markets remained quiet, although they did not weaken as much as other markets around the region, and the Indian real estate investment market continues to slow under the impact of the global economic downturn.