According to Jones Lang LaSalle's latest global real-estate capital report "Moving Further and Faster", real-estate investment in Thailand was buoyant last year. Both local and international investors actively acquired assets in Bangkok and key resort destinations like Phuket, Pattaya and Koh Samui.

The Bangkok office market in particular was the hottest spot last year with nine office buildings being acquired by institutional investors, funds and property funds.

This was in line with regional growth. The report showed that investment continues to target direct commercial real estate with US$682 billion (Bt92.4 trillion) invested in 2006, a surge of 38 per cent over 2005, and nearly double 2003 volumes.

In addition to direct commercial real-estate investment, investors privatised real estate investment trusts and other listed real-estate-owning entities valued at $48 billion, and purchased multi-family residential investments totalling $170 billion, bringing global real-estate investment to $900 billion.

In Asia Pacific, direct commercial real-estate investment reached $94 billion, up 41 per cent over 2005.

"There is currently a large overhang of investment targeting the sector with five dollars of money chasing every one dollar of product," said Guy Hollis, international director of Jones Lang LaSalle's International Capital Group.

"Global real-estate markets performed very strongly throughout 2006. It was the first year that all major developed and emerging market returns were both aligned and positive. Investment was driven by increased allocations to the asset class, growth in investible stock and the increased attention of opportunistic private equity players who identified relative value in the sector.

"These increased flows into real estate gave rise to two notable phenomena in 2006: an increasing number of 'mega-deals' and continued globalisation of the asset class."

Emerging markets had a strong year with more than $40 billion of transactions recorded, up 74 per cent. Many of them have appeared on investors' radar only recently and are exhibiting exhilarating rates of growth, with the Russian market expanding by more than 700 per cent during 2006 and strong deal flows in China, Turkey, Mexico and Brazil.

"However, with many of these emerging markets such as Vietnam still lacking transparency and some exhibiting signs of short-term oversupply, investors need to conduct thorough due diligence before committing their investment dollars," Hollis said.

In Asia Pacific, cross-border investment in 2006 represented 32 per cent of the total investment in the region (up from 29 per cent in 2005) and inter-regional investment was 22 per cent of investment (18 per cent in 2005).

Asia-Pacific markets were dominated by a resurgent Japan where transaction volumes surged 128 per cent to $52 billion, accounting for 55 per cent of investment in the region.

"Investors were buoyed by an end to deflation and a slow but steady growth rate in the world's second-largest economy. Japanese interest rates remain the world's lowest, providing investors with a healthy yield spread.

Competition for assets remains intense in the market with revitalised domestic investors dominating activity and cross-border investment relegated to 20 per cent of volume. Global, US and Australian funds are the major cross-border investors. Japanese investors and corporations were the dominant vendors.

However, a number of global funds are now selling assets purchased during the recession," said Hollis.

THE NATION