“Investors have generally shown a propensity to hold and are moving into assets that have the ability to generate a stable source of income or returns. This is largely due to the evolving investor base, as more sovereign wealth funds, pension funds and private equity have increased allocation to the region’s real estate,” said Cushman & Wakefield’s head of Asia Pacific research, Sigrid Zialcita.

The firm expects the Asia-Pacific region (which includes China land sales) to see a return of volume growth this year, driven by a steady increase for built commercial space pushing overall volumes up by 0 - 5 per cent. It expects that land markets will remain stable.

Cushman & Wakefield said that although global volumes (excluding land) rose 9 per cent over the course of the year, investment in Asia-Pacific saw “modest” growth (at 1 per cent) despite tightening measures being upheld. Investment in Chinese real estate, discounting land sales, increased by 5 per cent - which the firm said it attributes to stronger retail and hospitality demand.  Across the region, offices were the only sector to see a net gain for the year, which Cushman & Wakefield said mirrored their better performance in occupational terms.

The report looked at cross border investment and found that the US has seen the strongest investment in real estate over 2014, moving to the top of the rankings for the first time since 2009, at $390.6 billion – a rise of 16.2 per cent since 2013. The US has seen 16.2 per cent more investment than China – yet due to strong domestic investment in both regions, the two dominate the global rankings. Singapore and China were the third and fourth largest source of cross border capital respectively – which the report attributed to the prevalence of cooling measures, “which shrinks the number of investment targets and consequently, increases the need for diversification”. Globally, Asia-Pacific was the second largest source of cross-border capital, where over half were accounted for by inter-regional investments.

Zialcita added: “Property cooling measures in China, Singapore and Hong Kong have had a huge impact on investment activity in the region last year, diverting capital towards Tokyo, where policies were more conducive, as well as to Seoul and Sydney, where fundamentals in occupier markets were showing signs of improvement, in addition to their higher yields. Inter-regional outflows also picked up pace as Asian investors increased their asset holdings in London and New York.”

Cushman & Wakefield said that opportunities lie in increasing allocations to China to build up renminbi exposure and benefit from the impact of further government stimulus on spurring corporate growth.  It stressed that China should be carefully analysed, with opportunities for super prime offices existing in “tier one” cities such as Shanghai and Beijing, while the less crowded “tier two” cities that are focused on locations in the orbit of the former - such as Suzhou and Hangzhou -  are likely to be best for retail.

John Stinson, Cushman & Wakefield’s head of Asia-Pacific capital markets, said: “Demand for office investment in core markets is expected to remain strong, spurred by rental growth in key markets such as Singapore and Tokyo as well as opportunities in Sydney’s urban regeneration projects. As the world’s markets remained flushed with liquidity, competition for assets will compel investors to turn the spotlight on secondary markets and core-plus opportunistic strategies.

“There will be a diverse range of opportunities as a result, with core markets as well a wide variety of higher growth markets led by China and India. Southeast Asian markets also offer immense potential as they develop, with economic integration and continued investments into infrastructure developments a key driver of property fundamentals, particularly in commercial and industrial assets,” he added.