The value of property deals in China's mainland in the first three months rose 10 percent year on year, but fell 73 percent quarter on quarter to $2.8 billion, according to a report released yesterday by real estate services firm JLL.
The quarterly slump was partly due to a "lack of willing sellers" and an "increasingly polarized market between first and second-tier cities," it said.
"The large gap between buyers' and sellers' expectations resulted in a scarcity of assets," Anthony Couse, head of capital markets for JLL China, was quoted as saying.
"Institutional investors will continue to seek core stabilized assets in major cities, which are scarce given strong rental growth, and after a record year of investment in 2015," he said.
As a result, there might be more diversity among the deals struck as "opportunistic investors" look at alternative asset classes and secondary markets, he said.
Meanwhile, investment activity in Hong Kong in the first quarter more than doubled year on year to US$2.9 billion, the report said.
The city's largest single transaction was China Everbright's $1.3 billion purchase of Dah Sing Financial Centre.
For Asia-Pacific as a whole, investment in the first quarter fell 5 percent year on year to US$23.7 billion, as weakness in Japan outweighed gains in Hong Kong, Australia and South Korea, JLL said.
The value of deals in Japan, the region's biggest market, fell 26 percent from last year, but rose 65 percent quarter on quarter to US$9.6 billion, it said.
The report said investors appeared to favor local markets, probably due to the global economic uncertainty, with the value of intra-regional deals in the first three months rising more than 260 percent year on year to $4 billion.
