Cross-border capital flows and high domestic savings rates will continue to fuel surging real estate markets across the Asia-Pacific region, according to industry professionals attending the Asian off-shoot of the world’s largest real estate trade fair.

“There’s no shortage of capital looking to find a home in Asia,” Kevin Swaddle, Asia director for IPD Investment Property Databank, said at a seminar organised by Mipim Asia, which is meeting this week in Hong Kong.

According to data compiled by Henry Chin, global real estate research analyst with Rreef, a unit of Deutsche Bank, real estate investment in the region increased from $15bn in 2001 to $50bn last year. Of this, cross-border investment – which was negligible in the sector as recently as 2002 – reached $10bn last year, driven in part by US and European capital seeking higher yields.

CLSA, the Hong Kong-based brokerage, notes that at least 12 Asia-focused real estate funds were launched last year alone, locking in about $18.5bn. “We believe this is just the tip of the iceberg,” said John Saunders, CLSA’s managing director for regional property research.

“[America’s] pain is Asia’s gain,” Mr Saunders added. “Our base case is based on the premise that the US housing market is in severe stress.”

Mr Saunders argues that a potential turn in America’s interest rate cycle, while being “too little, too late” to revive the domestic housing market there, will be a boon to Hong Kong and the region. Hong Kong interest rates follow America’s by virtue of the territory’s currency peg to the US dollar and the prospect of an even weaker dollar should drive investment into markets such as Singapore and Tokyo.

The region is also awash with domestic savings. Last year, M1 as a per cent of GDP ranged from 23.7 per cent in Singapore to 79.4 per cent in Tokyo, compared with 11 per cent in the US.

In an example of the fever that has gripped Asian property markets over recent years, last week Hong Kong tycoon Richard Li sold a Tokyo office block for $1.7bn, in a deal that set a new record for the largest price ever paid for a single property in Japan.

In spite of the recent run-up in regional property prices, residential values in Hong Kong, Singapore and Japan remain well off their mid-1990s highs, when they traded at significant premiums to New York and London. Average residential prices in the three key Asia Pacific markets remain below $500 per square foot, according to CLSA, compared with average valuations of more than $1,000 per square foot in New York and London.

Reflecting global property investors’ interest in the region, this is only the second time that Mipim – best known for its annual show in Cannes – has hosted a sister event in Asia. The last time it convened in Asia was in Singapore in 1997, on the eve of the Asian financial crisis.