With the financial wounds many institutions are receiving right now, lending has reached an all time low. Many are therefore cashing in on existing assets to get some cash flow happening for refinancing purposes.
Property giant Savills has recently closed a massive deal in which they sold the Trade Square building in Hong Kong for an estimated US$200 million to get funds flowing again.
Asia is especially favoured right now by investors, since the market pressures those with huge mortgages to sell. Investors with plenty of cash flow can sit back quietly and wait for the housing prices to drop before they buy up big. This is especially true for American funds that are tied up in countries like Australia, Japan, Hong Kong and China.
Because these funds are highly leveraged it forces those with little or no cash flow into finding other solutions to keep going and selling off “stock” is the first logical solution that comes to mind.
With a real estate price fall of over 10 percent in the USA alone, studies have shown that these prices won’t recoup before 2017. This indeed is a very bleak picture and to be honest we are not sure whether this sounds accurate enough.
Robert McKeller CEO of Asia Pacific of Savills said that the company has never received so many instructions to sell as right now.
Despite this positive outlook, there will be some ramifications in the Asian property market too, simply for the fact that many companies are tied with the US or Europe.
With strong tourism, currently the residential property market is still strong and is set to stay so for now.
In China new government regulations have been set in place to curb the building trend which has forced many developers into looking for new sponsorships. Savills has resorted to co-invest into some of these to help them finish their already started projects, otherwise they would simply not have the funds to go on.
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