​ cAPITAL MARKETS

Asia Market Snapshot | Q3 2019

REGIONAL OVERVIEW

As expected, political and economic uncertainties and persistent trade tensions kept sentiment cautious in the region’s property markets in the third quarter, contributing to declining transaction volumes in major cities like Shanghai and Hong Kong. That said, prices in key bellwether markets like Singapore have held up relatively well, a trend that’s expected to continue in the run up to the end of the year as funds and investors ride out the volatility and wait for better times to return.

REGIONAL TRENDS

 

> South Korea office market still buzzing

11 properties with a combined estimated value of just under US$2 billion transacted in third quarter; aggregate 2019 transactions could top US$8.5 billion

> Singapore property sector shows broad-based growth

Total transaction values in the residential and office sectors increased about 90% in the third quarter, underlining the city’s appeal as a regional hub

> FDI flows into Indian real estate continue

US private equity giant Blackstone pays approximately US$350 million for flagship Mumbai office complex One BKC

> Activity slows in Shanghai

Transactions drop 77% quarter on quarter as trade war, economic slowdown bite

> Bangkok land boom losing steam

Residential development demand has sent land values in Thailand’s capital soaring in recent years, but with high competition and supply contributing to a slowdown in the sector, prices may soften in the coming months

Market Overview

Beijing

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Investors remained prudent regarding Beijing’s property sector, with an increase in total transaction amount by 12% from RMB2.83 billion to RMB3.18 billion QoQ. Investors will continue to focus on the office sector, as well as properties that generate stable income or substantial value-add potential. Foreign investors are also expected to be more active in Q4 2019.

Chengdu

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The government of Chengdu has issued “20 Policies and Measures for Supporting and Ensuring Key Projects” to create a legal and market-oriented business environment for enterprises. The stability of the office leasing market in Chengdu has also attracted domestic and overseas investment institutions to look to the city for investment opportunities.

hong kong

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​ ​ Despite geopolitical conditions taking a toll on market sentiments in Q3, local developers remained active. This quarter’s biggest deal is a government residential land sale in Kai Tak Area 4A Site 1 that was awarded to a consortium of three developers for USD1.626 billion. ​ ​ ​

INDIA

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The market remains buoyant for income-generating assets, which is evident from the continued interest of real estate funds backed by foreign money. Urbanisation and economic growth are driving real estate demand, with a growing requirement of commercial and co-working spaces.

Indonesia

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Jakarta plans to invest around USD40 billion to continue its improvements in the city. Keep a look out for the residential and industrial sectors next quarter, as the recent and continuous development of transportation infrastructures is expected to enable better mobility for the city’s population.

Japan

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Stock levels remain depleted, but transaction volumes have picked up in Q2, with a prominence of J-REIT purchases. Industrial assets continue to perform well as ‘last-mile’ locations attract investment-grade tenants. Retail assets outside of key-retailing streets retain their negative perception, especially in markets that are heavily dependent on tourism.

KOREA

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The Korean market remains active this quarter due to abundant liquidity and low interest rates. As new office buildings, including KB Finance Town, Parc1 and Yeouido Post Office are scheduled in 2020, the number of transactions in the Yeouido Business District are likely to see an increase as huge developments are completed.

Myanmar

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​ Investment opportunities in Myanmar are getting more pronounced, especially in key tourist destinations in the country. Most of the projects in the pipeline are 4- and 5-star hotels in Yangon, with investments in mid-tier developments geared towards business travellers, as it is viewed as a more sustainable venture in the city. ​

PRD

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​ Despite global economic slowdown, Guangzhou and Shenzhen remained resilient with four en-bloc transactions that amounted to USD500 million. The office and industrial property markets in the two cities are also expected to outperform other sectors in generating higher yields and supporting capital appreciation. ​ ​

Philippines

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Public construction is likely to recover following a full implementation of the 2019 national budget, indicating a strong appetite for office towers, residential condominiums, malls, hotels, and industrial parks. An uptick is expected in the residential sector next quarter as a result of strong demands in and outside Metro Manila.

SHANGHAI

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The total transaction amount in Q3 was USD780 million, down by 77% QoQ. Investors remained watchful on property investment opportunities in Shanghai amidst economic slowdown and ongoing US-China trade war. International and domestic investors will continue to focus on the office, retail, mixed-use and hotel sectors in Shanghai for Q4.

​ ​ Singapore

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​ Given Singapore’s strong foothold as a financial hub, the office sector, particularly prime office assets in the Central Business District, will remain highly appealing. The quarter’s largest deal is the sale of DUO Tower by M+S Pte Ltd to Allianz Real Estate and Gaw Capital Partners at USD1.045 billion. ​ ​

TAIWAN

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An overall demand for office and industrial assets remained robust this quarter; at least 140 Taiwanese companies with operations in Mainland China have committed to investing a total of USD19.35 billion in Taiwan. Insurance companies may be more active in Q4 as sizeable amounts of capital are allocated for real estate investment. ​ ​

​ Thailand

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Due to an environment of high competition and supply, developers in Thailand are encouraged to have a more diversified outlook that targets varied residential and mixed-use projects to widen risk exposure. An upward pressure on price is expected to dissipate with a slowdown in this sector. The changing tax laws will also make it more expensive for owners to land-bank.

​ Vietnam

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As of July, Vietnam’s GDP stands at 6.71%, surpassing the forecast of 5.9%, signifying a stable and steady growth for the country. In Q4 2019 through 2020, several launches of multiple mixed-use industrial projects have drawn a lot of attention from various investors, with one of the biggest projects being Amata City Long Tan that will begin construction at the end of 2019.

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OUR INSIGHTS

Asia Market Snapshot | Q2 2019

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Across the region, investors are taking stock after a politically eventful quarter, which saw everything from massive elections in India and Indonesia to protests in Hong Kong.

Asia Market Snapshot | Q1 2019

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As the unease wrought by the US-China trade war recedes into the background, real estate markets across Asia rung in the new year on a positive note

Asia Market Snapshot | Q4 2018

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While 2018 ended on an unsettled note for many investors, cautious optimism continues to prevail in the face of economic and geopolitical uncertainty.

© 2019 ​ ​ colliers international