Asia Pacific Investment Quarterly
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Savills World Research Asia Pacifi c Asia Pacifi c Investment Quarterly Q3 2018 Australia China (Northern) - Beijing/Tianjin China (Western) - Chengdu China (Southern) - Guangzhou/Shenzhen China (Eastern) - Shanghai Hong Kong | Indonesia | Japan Malaysia | New Zealand | Singapore South Korea | Taiwan Thailand | Vietnam Major Transactions Image: Hong Kong HIGHLIGHTS Japan remains attractive international institutions see stamp duty changes in July for investment, as Abe’s a window of opportunity if knocked the wind out of continued leadership reduces the right assets emerge at the residential sector and the likelihood of unexpected more realistic valuations. In introduced a note of caution changes in policy and the Korea, transactions volumes into commercial investment BOJ has confi rmed monetary are close to last year’s markets. In Hong Kong rising policy will remain somewhat record highs and abundant interest rates, US/China trade stimulative. Japan’s GDP liquidity has meant that friction and record low cap rebounded strongly in asset values have set new rates undermined sentiment Q2/2018, refl ecting healthy records. Demand in Australia and many sectors recorded a economic momentum. In for non-residential property tepid third quarter as a result. China, fi nancial deleveraging, remains near record highs, the trade war and a as a normalisation across Simon Smith, Savills Research stock market rout have sectors and states drives conspired to subdue market investor sentiment to post- activity levels while some GFC highs.In Singapore, savills.com.hk/research 01 Asia Pacifi c | Investment Quarterly An introduction to Savills Savills Asia Pacific Network Asia Australia Hong Kong Taiwan Adelaide Central (2) Taichung Brisbane Taikoo Shing (2) Taipei (2) Canberra Tsim Sha Tsui 2 Thailand Gold Coast 5 Gordon India Bangkok Lindfield Bangalore Mumbai 47 Melbourne Vietnam Offices Notting Hill Gurgaon Da nang Parramatta Hanoi 2 Perth Indonesia Ho Chi Minh City Roseville Jakarta St Ives Sunshine Coast Japan Sydney Tokyo Turramurra Macau 3 Cambodia Macau Phnom Penh * Malaysia Johor Bahru China Kuala Lumpur Beijing Penang Chengdu & New Chongqing Z New Zealand lia e Dalian Auckland a a Guangzhou r Christchurch t la s Hangzhou n u Nanjing Philippines d Shanghai A Makati City * Shenyang Bonifacio Global City * Shenzhen 18 Tianjin Singapore Offices Wuhan Singapore (3) Xiamen Xi’an South Korea 6 Zhuhai Seoul *Associate Office Source: Savills Research & Consultancy Savills is a leading global real and Viet Nam. Savills provides a We are regarded as an innovative- estate service provider listed on comprehensive range of advisory thinking organisation supported by the London Stock Exchange. The and professional property services excellent negotiating skills. Savills company, established in 1855, has a to developers, owners, tenants and chooses to focus on a defi ned set of rich heritage with unrivalled growth. investors. These include consultancy clients, offering a premium service The company now has over 600 services, facilities management, to organisations and individuals offi ces and associates throughout space planning, corporate real estate with whom we share a common the Americas, Europe, Asia Pacifi c, services, property management, goal. Savills is synonymous with a Africa and the Middle East. leasing, valuation and sales in all key high-quality service offering and a segments of commercial, residential, premium brand, taking a long-term In Asia Pacifi c, Savills has 65 industrial, retail, investment and hotel view of real estate and investing in regional offi ces comprising over property. strategic relationships. 25,000 staff. Asia Pacifi c markets include Australia, China, Hong Kong, A unique combination of sector India, Indonesia, Japan, Macau, knowledge and entrepreneurial fl air Malaysia, New Zealand, Singapore, gives clients access to real estate South Korea, Taiwan, Thailand expertise of the highest calibre. 02 Q3 2018 Contents Australia 04 China (Northern) - Beijing 05 China (Northern) - Tianjin 06 China (Western) - Chengdu 07 China (Southern) - Guangzhou 08 China (Southern) - Shenzhen 09 China (Eastern) - Shanghai 10 Hong Kong 11 Indonesia 12 Japan 13 Malaysia 14 New Zealand 15 Singapore 16 South Korea 17 Taiwan 18 Thailand 19 Viet Nam 20 Major transactions Q3 2018 21 savills.com.hk/research 03 Asia Pacifi c | Investment Quarterly Australia Paul Craig Shrabastee Mallik CEO Associate Director, Capital Strategy +61 2 8215 8888 Research & Consultancy [email protected] +61 2 8215 8880 [email protected] Australia’s appeal as a prime direction of foreign capital, with a shift hand, property industry sentiment investment destination, particularly for away from Sydney toward Melbourne (across both residential housing and direct property, remains strong, with and Brisbane in search of yield and commercial property), whilst still its stable and mature fi nancial markets more affordable investment options. positive, has been steadily falling and strong real estate fundamentals We expect a continuation of this since the start of 2018. However, keeping it a standout among global trend, with a resurgence in economic economic fundamentals remain strong peers. Australian direct property fundamentals in WA likely to drive for Australia, with forward looking returned 11.7% over the year to June capital to Perth. indicators supporting ongoing growth. 2018, according to latest available The past year has also seen the rise of data, aided by notable outperformance The next 12-18 months will be alternate property classes (e.g. child across East Coast offi ce markets. monitored closely by investors as care and medical centres) as investors Total returns for the offi ce sector were opposing forces in the Australian look to diversify. Whether this goes on reported at 14.7% over the year to economic landscape may lead to to temper demand for more traditional June 2018 nationally, (the highest very different outcomes. On the one property assets remains to be seen. recorded fi gure since March 2008), driven by outperformance of Sydney’s GRAPH 1 offi ce markets. The Sydney CBD Australia property sales, Sep 2003 – Sep 2018 returned 17.6% on the back of near record high capital returns (12.1%), as recent growth was accounted for Office sales Industrial sales Retail sales in valuations. It was clear that the 35 ongoing yield compression cycle in the CBD spurred investor activity 30 in Sydney’s fringe offi ce markets, with total returns in these markets 25 exceeding those in other national CBDs. 20 On the other hand, the Hayne Banking Royal Commission and AUD billion 15 growing macro-prudential policies from regulatory authorities and 10 tightening fi nancial conditions has had a dampening effect on Australia’s 5 residential property prices, with these effects more pronounced in 0 Sydney and Melbourne. According to latest available data from the ABS, median house prices fell 12.1% and 1.7% across Sydney and Melbourne Source: Savills Research & Consultancy respectively over the 12 months to June 2018, following record growth in TABLE 1 recent years. Major investment transactions, Q3/2018 Sales activity across Australia’s offi ce, Property Location Price Buyer Usage industrial and retail sectors remained Eastgardens, strong, with over $30 billion of Westfi eld Eastgardens NSW AU$720.0 mil/US$511.2 mil Scentre Group Retail transactions recorded in the 12 months 80 Ann Street Brisbane, AU$418.0 mil/US$296.8 mil M&G Real Estate Offi ce to September, the second highest QLD fi gure on record. Overall sales activity 60 Station Street Parramatta, (Eclipse Tower) NSW AU$277.6 mil/US$197.1 mil GPT Offi ce was buoyed by record high sales Hong Kong Monetary Authority, volumes in the retail sector, with close 1 Sussex Street Sydney, (Daramu House) NSW AU$250.0 mil/US$177.5 mil Lendlease's Australian Prime Offi ce to $10 billion of retail assets being Property Fund transacted over the period. Sydney, 275 George Street NSW AU$240.0 mil/US$170.4 mil Daibiru Corporation Offi ce Homemaker The Fortitude Whilst foreign investor demand for Valley Valley, QLD AUS170.0 mil/US$120.7 mil Arkadia Capital Retail Australian real estate assets remained strong, there was a notable shift in the Source: Savills Research & Consultancy 04 Q3 2018 China (Northern) - Beijing Spring Cao Jack Xiong Senior Director Head of PDC, Director Investment, Savills Northern China Research +8610 5925 2048 +86 10 5925 2042 [email protected] [email protected] The en-bloc investment market end of Q3/2018. Total consideration expected to be the main drivers witnessed the closing of four deals recorded was RMB3.61 billion, down of transactions, while there will in Q3/2018, registering a total 4.1% QoQ although slightly up 0.7% continue to be a shift away from consideration of RMB3.57 billion. YoY. The average transaction price speculative activity. Traditional asset classes proved registered RMB34,284 per sq m, up popular during the quarter with deals 19.5% QoQ and 26.8% YoY. Meanwhile, the recent policy concluded in both the offi ce and adjustment will likely halt the further retail markets. Major transactions With no loosening of the regulatory supply of new commercial land in included: framework foreseeable in the the main urban areas of Beijing. The near future, it is expected that move is expected to push up capital ZLink in Zhongguancun transaction volumes of strata-title values and rental expectations Software Park, located in Haidian commercial projects will remain low of current stock in the market, district, was acquired by Allianz for and will focus on existing stock in particularly in mature business a total consideration of RMB1.34 the market. Companies with actual districts. billion. investment needs for assets are Fangheng Fashion Centre, also located in Haidian district, GRAPH 2 was acquired by Toutiao for a consideration of RMB2.2 billion. En-bloc investment volumes, 2007 – Q3/2018 China Life Investment Holding Company purchased a 100% Q1 Q2 Q3 Q4 60 equity share in both the podium at Tongtai Plaza and the podium at No.25 Longze West Mansion for an 50 undisclosed consideration.