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Thursday, November 25, 2010

Japan's commercial properties have largest debt-funding gap in Asia Pacific

Japan's commercial properties have the largest debt-funding gap in Asia Pacific, at US$70 billion.

This is according to research by real estate firm DTZ.

The funding gap is defined as the difference between the debt secured by a commercial property that is maturing and needs to be paid, and the debt that is available to fill the vacuum.

According to DTZ Asia Pacific Research, aside from Japan, the only other markets in Asia-Pacific with funding gaps are Australia and New Zealand. However, the shortfalls in these countries are only US$500 million and US$100 million, respectively.

DTZ added that despite a development boom in China and India recently, neither has a debt-funding gap as capital values have held up.

As a result, DTZ said both countries have been insulated against any significant downturn.

Globally, DTZ also estimates that US$376 billion of equity capital is available for investment in commercial properties in the next three years.

This works out to more than 1.5 times the estimated global debt-funding gap in the next three years, which DTZ estimates at US$245 billion.

However, DTZ cautions that the debt-funding gap continues to be the biggest challenge in many international property markets.

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