Economy and Business

Outlook bright for Savills' Asia Pacific Business

(China Daily Shanghai Bureau)
Updated: 2011-03-25 17:00

BEIJING - International real estate advisor Savills announced its 2010 financial results and 2011 regional development plan at a press conference held in the Chinese capital March 21.

Savills reported a strong performance driven by a resurgence of investment activity in prime global markets, notably in London and several Asian capitals. Over 60 per cent of global profits were derived from Asia Pacific. In 2010, Savills concluded in excess of $6.9 billion in investment transactions across the region and managed over 91 million square meters of property.

Mr.Robert McKellar, CEO of Savills Asia Pacific said, "Our business is in great shape, and we will achieve another year of growth in 2011." "There will be a special drive in the key metropolis cities in North East Asia. We will be making a greater effort to win market share in Beijing, Shanghai, Seoul and Tokyo, which represent potentially the four largest markets in the Asia Pacific Region for Savills."

Mr.Raymond Lee, CEO of Savills Greater China, introduced the Savills 2011 development plan during the press conference. He indicated that a number of new business lines were being rolled out, including a capital sourcing team for investment into overseas and Asian property funds.

According to Savills Research, residential property prices in China rose by 7.3 per cent in 2010 with total transaction volume exceeding 1 billion square meters.

The Chinese government implemented a series of measures to bring the residential market to heel in 2010. The regulations were designed to minimize speculative risk and encourage end-user demand. Under the direction of the government, the real estate industry continued to record stable growth. According to Savills, there are several drivers going forward including end-user demand, limited investment channels, urbanization and upgrade demand.

China's commercial real estate market is also performing well. The office market saw a strong recovery in demand over the last eighteen months. Vacancy rates stabilized at 10 to 20 percent in Beijing and Shanghai. While rental rates have increased, capital values have risen faster, causing gross yields to compress to five to six per cent.

Demand and rents are also recovering in the retail market as government initiatives to promote domestic consumption elevate its long-term prospects. International consumer goods and mid-end fashion retailers made a major push into the retail market in 2010, and this is expected to continue into the foreseeable future.