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Asia Market Snapshot | Q2 2018

REGIONAL OVERVIEW

Despite signs of a slowdown in some areas – such as the flow of Chinese capital into Hong Kong’s property market, or sales in the Indonesian residential and office sectors – investors are still eager to explore and seize on opportunities in this fast-growing region. Interest in residential and commercial projects in major cities such as Shanghai, Hong Kong, Singapore and Taipei remains high, supported by robust economic growth signals and government efforts to drive improvements in sectors such as retail and industrial. Ambitious transportation initiatives continue to open new development and investment possibilities in markets like Thailand and Indonesia. We expect these trends and positive geopolitical signals such as the rapprochement between the two Koreas to keep regional property markets active even as global trade tensions and economic uncertainty appear to be on the rise.

 

 

REGIONAL TRENDS

 

> Residential demand remains high in Hong Kong

Government tender for Kai Tak site sets record for Hong Kong’s most expensive-ever land parcel with successful USD3.2 billion bid

> Competition grows for prime Seoul offices

Centropolis sale expected to raise the bar for South Korea office transactions

> Positive policy changes to add to Thailand’s appeal

New law would allow lease rights to be transferred and inherited, building the case for investment

> China retail activity sees uptick

Landmark Shanghai shopping mall acquired by joint venture for USD390 million

> Collective sales continue to shine in Singapore

USD693 million sale of prime freehold site marks second-highest collective sale value so far this year

Market Overview

Beijing

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Underperforming retail assets have been the main focus for investors, including retail operators. Despite investors remaining interested in the office sector, limited opportunities resulted in zero recorded transactions in Q2.

Chengdu

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Infrastructure has seen rapid improvement, especially in transportation; development projects with residential components have remained investors’ top priority.

Hong Kong

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Institutional investors have begun to refocus on the office market as well as value-add opportunities, hoping to profit on surging demand in the sector.

India

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Demand for affordable housing has continued to drive residential sales and is expected to stabilise while well-managed pre-leased office space remains the most sought-after asset for the majority of PE capital flowing into India’s real estate sector.

Indonesia

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Despite a continued slower than expected pace of sales in the strata apartment market as well as the office leasing and strata sales sector, foreign investors and developers continue to explore the market for joint development opportunities.

Japan

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The Japan property market maintained its strong momentum in Q2, with a significant gap between demand and supply. Leasing markets across the office, residential and logistics sectors remain strong and rents have started to rise in the residential sector in Tokyo.

Korea

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The success of the recent North Korea–U.S. summit could be a catalyst for foreign investors to re-evaluate investment in the Korean market. Foreign investors initially hesitant due to geopolitical risks may now look to enter the market and potentially diversify their investment pool.

Myanmar

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Myanmar’s property growth prospects remain promising. Investor interest, particularly from China, Japan, Korea and Singapore, among others, is robust. While Yangon remains a key investment destination, Mandalay is also becoming more apparent on the radar.

Philippines

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The real estate sector has continued its strong performance, with diversified tenancy driving demand in the office sector and residential sales mirroring last year’s record sales in the primary market.

Shanghai

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Demand for office space remained strong this quarter and as a result the office sector remains the most active investment market. Meanwhile, the retail sector will continue to be popular among investors.

Singapore

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Singapore’s investment market remains active with acquisitions in both the residential and commercial sectors in Q2 2018 on the back of strong economic performance and an improving business outlook.

Taiwan

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Total commercial property transaction volumes rebounded and reached TWD28 billion (USD933m) in Q2, approximately 85% of those transactions were for occupational purposes. Land transactions remained active achieving the second-highest record in Q2.

PRD

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Investors have continued to show interest in the region with total transaction volume growing 20% QoQ, and we expect the market to become even more active in the second half of 2018.

Thailand

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In the office segment, the squeeze in supply continues, with occupancy rates in grade A and grade B buildings remaining high, extending the rising rental trend which is attracting international investors, particularly into the capital city.

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OUR INSIGHTS

Asia Market Snapshot | Q1 2018

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In Q1 2018, robust growth and forward-looking government policies boost Asia's overall property sector.

ASIA MARKET SNAPSHOT | Q4 2017

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In yet another display of Asia’s dynamism, 2017 ended with a flurry of activity across the region that showed few signs of abating as we entered the new year.

ASIA MARKET SNAPSHOT | Q3 2017

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The Asian gateway cities of Hong Kong, Singapore and Shanghai reigned in investment activity, while the industrial sector was one of the best performing this quarter.

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