Capital Markets & Investment Services Markets
Asia Pacific Market Snapshot Q2 2021 Overview Hong Kong Taiwan Investment transaction Commercial property The ongoing recovery in key property markets across Asia Pacific continued in the volumes leap 175% YOY to transaction volumes rise second quarter of 2021 and looks set to sustain through the second half, aided by HKD33.6 billion 58% YoY to TWD27.5 billion strong demand for commercial assets from end-users as well as investors. (USD4.33 billion) (USD982 million)
In China, a total of 30 deals were finalised across major markets, as both domestic and foreign market participants sought to acquire key assets across property segments. Korea continued to witness record-high unit prices for prime office space in Seoul, and Japan’s property markets remained buoyant in the face of stringent restrictions. In Singapore, investment activity was dominated by the privatisation of REITs, while in India, global private equity (PE) firms and developers made significant acquisitions in metro markets. Taiwan witnessed a surge in demand for commercial property from manufacturers on the back of strong export growth. In the Philippines, e-commerce companies and China Singapore outsourcing firms took up space in data centres while healthcare and logistics companies should lead office take-up in the coming months. Thailand’s office market remained stable though its troubled hospitality industry could see higher Beijing records transactions Total investment sales transaction levels as beleaguered owners look to sell assets. We also expect to see more joint ventures between Thai worth RMB26 billion (including government and and international investors across sectors. In Indonesia, the residential sector is expected to receive a boost from the (USD4.02 billion), more private land sales) grow extension of a tax waiver while urban mixed-use projects in the capital, Jakarta, received an influx of foreign funds as than previous three 86.3% QoQ to SGD7.03 billion investors bet on a speedy post-COVID-19 recovery. quarters combined (USD5.2 billion)
Terence Tang John Marasco Managing Director Managing Director Capital Markets & Investment Services Capital Markets & Investment Services Asia Australia and New Zealand State Chief Executive Korea Indonesia Victoria Pinnacle Yeoksam Building USD470 million Jakarta urban sells for a record unit price development project lures of KRW40 million per pyeong foreign investors (USD10,650 per sq m) Australia and New Zealand continue to witness Low rates, liquidity boost demand for Korea office assets investment market revival Abundant liquidity and a strong preference for core assets in Seoul’s During the first half of the year, the return of employees to the office Gangnam Business District (GBD), mainly from technology firm occupiers, continued to gain momentum and boost sentiment and business activity continued to fuel investment volumes, which hit KRW2.2 trillion (USD1.9 Please contact our billion) in Q2. Recent transactions have achieved unit prices in excess of across the main property markets of Australia and New Zealand. In Sydney, relevant capital market office and leasing enquiries showed steady improvement and we expect core- KRW30 million per pyeong (3.3 sq m) with the Pinnacle Yeoksam building plus and value-add investors to become more active in the CBD. The current selling for a record unit price of KRW40 million per pyeong. Given liquidity experts for further restrictions in Sydney may momentarily stall some activity, but with the levels, low interest rates and the fact that the GBD has consistently recorded insights and in-depth momentum gained through the first half of the year coupled with improved the lowest vacancy rates among Seoul’s three major office districts, we discussions on key market conditions, it is not expected to impact activity once restrictions are see further investment activity in the area led by institutional investors in lifted. Melbourne also witnessed a busy Q2, which saw the announcement of the coming months. trends and maximise several landmark deals. In Brisbane, the quick rebound of small and mid- opportunities across the sized businesses helped renew leasing demand in the CBD office market while Auckland’s property market sustained its strong recovery aided by Japanese property market demonstrates resilience region. demand for industrial and large-format retail assets. Stringent measures to tamp down rising COVID-19 cases failed to dampen
Japan’s robust property market. Interest and investment continued unabated Market insights as at 21 July 2021 Investment activity picks up in Hong Kong across the office, residential and logistics sectors, with even the ailing hospitality sector showing signs of a revival ahead of the upcoming Tokyo Amid growing optimism about a gradual recovery in the city’s property Olympic Games. We see market participants gearing up for a post-COVID-19 market and the overall economy, institutional investors became more active rebound, aided by faster vaccinations. More workers returning to offices, will in Hong Kong, accounting for more than 70% of transactions in Q2. With the strengthen Japan’s flagship real estate sector and boost overall investment vaccine roll-out picking up speed, we expect low interest rates and ample volumes, although ongoing border restrictions mean acquisitions may be liquidity to encourage deal-making for the rest of the year. While prices for limited to those with a Japan platform. most commercial sectors are predicted to bottom out in 2021, the next few months should provide an opportunity for investors to hunt for bargains before a rebound begins next year. Office property demand fuels deals in major Chinese markets
REITs in focus in Singapore The June quarter saw over two dozen transactions finalised in China’s key markets. Beijing alone recorded 12 transactions whose total value outpaced Investment activity dominated Q2 with several significant transactions that of the previous three quarters combined. In Shanghai, which saw 10 involving REITs. Investors sought opportunities to acquire office properties transactions close, end-users led activity in office and business park assets while the industrial sector remained active with acquisitions and sales. and are expected to remain active while investors turned to residential, There was strong interest in the residential segment as well, especially logistics and hospitality projects. Shenzhen witnessed five transactions while from high-net-worth investors. These trends demonstrate how Singapore is Guangzhou recorded three deals and we expect investors to continue to gradually reclaiming its safe-haven status, and we expect to see continued favour malls, data centres, and logistics and healthcare facilities in the city. appetite from local and foreign developers and investors, including for In Western China, several deals under negotiation in Chengdu are expected redevelopment opportunities, as vaccinations gather pace and business to close in the coming months while institutional buyers will prioritise office confidence is restored. assets in Xi’an. Beijing
Korea
South China Japan West China Shanghai Taiwan
Hong Kong
Philippines
India Brisbane Thailand Sydney
Singapore Melbourne
Indonesia Auckland
Asia Pacific markets at a glance – An interactive map
Click through to view specific market snapshots to find out more Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 5
Auckland Home AA Insurance House Market activity has intensified over recent months as investor sentiment has Biggest deal | USD73.48M | Office improved. The increase in confidence has been driven by a positive economic backdrop, low interest rates and a growing belief that the worst of the • Industrial disruption caused by COVID-19 has passed. • Large Format Retail Major movers of the quarter Review Forecast Market activity pickup was maintained over the opening March quarter GDP figures provided further evidence that New • Industrial months of 2021 led by the industrial and retail sectors, Zealand’s economy continues to outperform expectations. It is, the latter driven by demand for large-format retail assets. therefore, increasingly likely that interest rates have reached • Office Confidence in the office sector is increasingly apparent with their cyclical low. However, rate hikes will be incremental Sectors to watch property funds and developers having made significant thereby maintaining the low interest rate environment for an purchases in both Auckland and Wellington in recent months. extended period. The ramping up of vaccination programmes, A growing number of workers are choosing to return to the locally and internationally, will enable a progressive relaxation office, while confirmed tenant demand for space within new of border restrictions, facilitating greater international projects is underpinning development activity. involvement in the market. While defensive assets such as industrial and large-format retail properties will remain Chris Dibble National Director | Competition for a limited number of assets in concert with the popular, increased competition and growing confidence will low interest rate environment has driven yield compression. Colliers Partnerships, Research and Communications encourage allocation of funds to a wider range of assets. [email protected]
Ian Little Associate Director | Research Key market deals [email protected]
AA Insurance House Bunnings New Lynn 18 Ron Driver Place Richard Kirke Location: 46 Sale Street Location: 2-12 Titirangi Road Location: East Tamaki, Auckland International Sales Director | Capital Markets Value in USD: 73.48 million Value in USD: 39.01 million Value in USD: 28 million [email protected] Size: 11,732 sq m Size: 22,989 sq m Size: 7,979 sq m Peter Herdson Buyer: Stride Property Group Buyer: Confidential Buyer: Jasper National Director | Capital Markets Seller: CC Hear Trust PTE. Ltd Seller: The Trust Co (Australia) Ltd Seller: Jnz NZ Holdings [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 6
Beijing Home 12 In Q2, Beijing recorded 12 transactions with a total value of nearly En-bloc transactions RMB26 billion (USD4.02 billion). Both the total transacted area, which amounted to approximately 490,000 sq m, and the total transaction value were higher than those recorded in the previous three quarters combined. USD4.0M Combined value Review Forecast
Domestic capital, mainly attributable to banks, insurance Office properties in Zhongguancun, Shangdi and CBD areas companies and self-users, continued to expand its market share will be the focus of the market in the next quarter. Buyers, SK Tower in Q2. Foreign capital, although its share declined, increased including SOEs and financial institutions, will retain their focus Biggest deal | USD1.39B | Office its total investment value by over 40% QoQ, demonstrating on the core area but will continue to be limited by the scarcity the significant growth in foreign investor confidence. Six office of available properties. transactions were recorded in Q2, worth RMB16.9 billion • Office (USD2.61 billion) and accounted for 65% of the total volume, including the acquisition of SK Tower by Hexie Health Insurance • Business Park as an investment for RMB9 billion (USD1.39 billion). Three retail Major movers of the quarter projects worth a total of RMB3.9 billion (USD603 million), two hotels worth RMB1.3 billion (USD201 million) and one data center worth RMB3.8 billion (USD588 million) also changed • Office hands during Q2. • Logistics Sectors to watch Key market deals
SK Tower 50% Equity of Bloomage Live Shunyi Data Center Location: Chaoyang District Location: Haidian District Location: Shunyi District Value in USD: 1.39 billion Value in USD: 511 million Value in USD: 585 million Size: 107,627 sq m Size: 80,000 sq m Size: 19,000 sq m Buyer: Hexie Health Insurance Buyer: CIFI Group Buyer: GDS Charles Yan Managing Director | Beijing Seller: SK Group Seller: Bloomage Seller: Citic PE [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 7
Brisbane Home Industrial The resilience of small and mid-sized enterprises (SMEs) and their speedy Major movers of the quarter rebound has underpinned the recovery of leasing demand within the Brisbane CBD office market. • Build to Rent Review Forecast • Multi-family The job market has recovered rapidly, with the number of jobs Investment activity in the Brisbane CBD office market was Sectors to watch (2.61 million in April 2021) remaining above pre-pandemic subdued during 2020 but we expect to see a significant levels despite the end of the JobKeeper support programme increase in activity during H2, 2021. in March. The unemployment rate for April, estimated at 6.1%, is significantly below the 8.7% seen in July 2020. Office Significant infrastructure projects in Brisbane will be brought occupancy levels in the Brisbane CBD - at 71% as of May forward in anticipation of the 2032 Olympic and Paralympic 2021- remain below pre-COVID levels, according to the latest Games, leading to an increase in interstate migration into figures from the Property Council of Australia. However, Southeast Queensland, as it has over the past six months. Brisbane has consistently performed better on this metric than both Sydney (68%) and Melbourne (45%) since July 2020. Additionally, with the flight-to-quality trend intensifying, there is a clear divergence between the performance of prime and secondary assets as vacancies and incentives grow faster for lower-quality assets.
Key market deals
545 Queen Street Location: Brisbane City Value in USD: 88.9 million Size: 13,363sqm Jason Lynch Buyer: Cromwell Direct Property Fund National Director | Capital Markets Seller: Axis Capital (on behalf of Private Investor Mandate) [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 8
Hong Kong Home 5 Office, retail and industrial transactions rose in tandem in Hong En-bloc transactions Kong’s investment market. The economic rebound, low interest rate environment and improving labour market further supported a recovery in investment sentiment. USD1.8B Combined value Review Forecast
Hong Kong investment transaction volumes picked up Transaction activity is expected to pick up further in the Kowloonbay International noticeably in Q2 to reach HKD25.5 billion (USD3.3 billion), up second half, as investors have regained confidence on the 168% QoQ and 190% YoY. Despite strong investment appetite back of the sustained economic recovery and vaccine rollouts. Trade & Exhibition Centre for the industrial sector, stock of prime industrial assets is Low interest rates and ample liquidity will continue to support Biggest deal | USD1.3B | Mixed commercial relatively limited, prompting more capital to deploy into the transaction levels towards end-2021. While we expect prices office and retail sectors compared to Q1. Amid optimism in most commercial sectors to bottom out in 2021, the next • Office about a gradual market recovery, institutional investors are few months should provide a window for investors to hunt for becoming more active in acquisitions, accounting for over 70% assets before an anticipated rebound from 2022. • Retail of transactions in Q2. Some developers are disposing of non- • Industrial core assets to churn capital for long-term asset optimisation. Major movers of the quarter
Key market deals • Cold chain logistics • Neighbourhood retail Kowloonbay International Trade & Cable TV Tower Brilliant Cold Storage Tower 2 Exhibition Centre (multiple floors and units) Location: Kwai Chung • Strata-title office Location: Kowloon Bay Location: Tsuen Wan Value in USD: 230.8 million Sectors to watch Value in USD: 1.3 billion Value in USD: 333.3 million Size: 27,300 sq m Size: 165,000 sq m Size: 52,000 sq m Buyer: ESR Buyer: Joint venture led by Buyer: Schroder Pamfleet Seller: Tang Shing Bor Family Billion Development Seller: The Wharf Nigel Smith Managing Director | Hong Kong Seller: Hopewell [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 9
India Home 3 The lockdown induced by a second wave of COVID-19 has resulted in lower residential sales. Developers have been En-bloc transactions faced with approvals and construction delays. However, the vaccination drive undertaken by the government has improved industry confidence, resulting in new investment, acquisitions and platform deals.
Review Forecast USD1,120M Combined value Lower residential sales owing to the lockdown, coupled with The extended lockdown may impact residential demand and stressed project completion schedules, have compelled weigh on housing prices in the near to mid term. However, with developers to readjust prices to reduce inventory and maintain increased investor confidence and ongoing industry consolidation, cash flows. Commercial leasing activity also remained subdued a gradual recovery can be expected in the residential and Multiple retail-led with organisations extending ‘work from home’ policies. commercial sectors over FY22. The warehousing sector is poised Warehousing activity has witnessed sustained traction on the back to attract more investment over the coming years given higher mixed-use assets of growing demand from e-commerce players, rising consumerism demand for organized warehousing and the potential for stable Biggest deal | USD733M | Retail / Mixed use and interest from institutional developers. Global PE investors and returns. With growing demand for mid-income and affordable developers have been expanding their footprint with significant housing, significant traction in terms of new project supply and acquisitions on the outskirts of major metro areas such as price growth can be expected in tier 2 cities such as Ahmedabad, • Office Bengaluru, the National Capital Region (NCR) and Mumbai. On the Hyderabad, Pune, and the outskirts of the Mumbai metropolitan investment front, platform deals between corporate developers region (MMR) and NCR. • Warehousing and global PE funds have focused on greenfield commercial Major movers of the quarter developments and brownfield consolidation of stressed assets. Last-mile debt funding deals have picked up for stalled residential projects nearing completion, thereby ensuring delivery and • Commercial reducing overall financial stress within the sector. • Warehousing • Alternative assets (Data Key market deals centres / Co-working) Retail led mixed use assets Intellion Park, IT SEZ Commercial Park JV Sectors to watch Location: Mumbai and Pune Location: Chennai and Gurugram Location: Bengaluru Value in USD: 733 million Value in USD: 266 million Value in USD: 120 million GFA in sqm: 3.4 million GFA in sqm: 8.0 million Gross Development Potential: 2.5 million sq ft Piyush Gupta Buyer: GIC Buyer: CPPIB Developer: Prestige Group Managing Director | Seller: Phoenix Mills Seller: TATA Realty Land owner: Century Group Capital Markets & Investment Services [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 10
Indonesia Home • Affordable Landed Housing With few new investments in the property markets since the start of Covid-19, Mitsubishi • Data Centers Estate’s recent announcement of its participation in the JPY52.1 billion (USD470 million) Oasis Central Investment mixed-use project is good news. Construction on the 33,000 sq m • Logistics site in early 2024 and is scheduled for completion around 2028. Major movers of the quarter • Transit-oriented Review Forecast Developments Responding to the worst outbreak of Covid-19 in Southeast In a positive development for the Indonesian property Asia, President Joko Widodo recently implemented new industry, the Ministry of Finance extended a waiver on a • Infrastructure lockdown rules that will run from July 2 until July 20. The Value Added Tax from the end of August 2021 until the end • Bank note & measures, which include tighter restrictions on travel, a ban of December 2021. The move, which provides as much as a on restaurant dining and closure of malls and non-essential 100 percent waiver for affordable housing, should provide a vproperty sales offices, will apply to Java, Indonesia’s most populous island much-needed prop for the residential real estate market. Sectors to watch and the tourist island of Bali, two of the country’s main growth engines. According to epidemiologists in the health ministry, Indonesia is expected to achieve herd immunity in the second quarter of 2022, and the optimistic view holds that the country may be able to start promoting tourism again only after the second quarter of 2022.
Key market deals
Land At Sawangan Land At BSD Block II.7. GOBD Location: Jl. Mawar, Bojongsari, Depok Location: Jl. BSD Raya Utama, BSD City, Tangerang, Banten Value in USD: 6.418 million Value in USD: Confidential Size: 71,820 sq m Size: 10,000 sq m Buyer: Tact Home Co Ltd Buyer: PT Famon Awal Bros Sedaya (Primaya) Steve Atherton Director | Capital Markets & Investment Services Seller: PT Andalan Indo Investama Seller: PT. Gema Prima Properti [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 11
Japan Home 15 Even amidst the most stringent lockdown to date, interest and investment En-bloc transactions in Japan property remains robust across the office, residential, and logistics sectors, with signs of life emerging in the hospitality sector as vaccination rates increase ahead of the Tokyo Olympics. USD2,824M Combined value Review Forecast As has been the case since early 2020, the multi-family As the vaccination rate increases in the lead-up to the Dentsu HQ Building residential and logistics sectors continue to draw the most Olympics, we are beginning to see a light at the end of the Biggest deal | USD2.4B (Sale Pending | attention from cross-border buyers in particular, though this tunnel for the hospitality sector, with market participants Office quarter has also seen a marked uptick in the office sector, with gearing up for a post-pandemic rebound. That said, we expect investors remaining confident of the sector’s long-term staying buyers to continue to hesitate on hospitality deals, given power. As a testament to this growing appetite, ad agency the challenges of pricing assets in an environment with few • Office (HQ Buildings) Dentsu has announced that it has accepted a USD2.4 billion benchmark transactions. Similarly, although ongoing border offer for its headquarters building in Tokyo, which, if the restrictions will largely limit acquisitions to those with a Japan • Logistics transaction closes, would be the largest single-asset property platform, expectations for a return to the office are boosting Major movers of the quarter deal ever recorded in Japan. sentiment for Japan’s flagship sector, which should in turn bolster overall property investment volumes. • Office • Hospitality Sectors to watch Key market deals
Hewlett Packard Japan HQ Building ESR Ichikawa DC (25% interest) Osaka Nanko-Minami Logistics Center Location: Chiba Location: Chiba Location: Osaka Value in USD: 354 million Value in USD: 217 million Value in USD: 135 million Size: 42,500 sq m Size: 201,000 sq m Size: 61,300 sq m Buyer: Mapletree Buyer: M&G Real Estate Buyer: Hana Alternative AM Hideki Ota Head of Japan Capital Markets & Investment Services Seller: Hulic Seller: ESR Seller: SBS Holdings [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 12
Korea Home 13 Core office unit prices per pyeong (py) (3.3 sqm) have been steadily En-bloc transactions increasing due to limited buying opportunities and high preference for the sector. Unit prices of transactions in Seoul’s Gangnam business district (GBD) in particular are expected to continue to rise. USD1.9B Combined value Review Forecast
Investment volume for the quarter totalled KRW2.2 trillion Abundant liquidity, low interest rates and institutional (USD1.9 billion). Due to abundant market liquidity and a investors’ growing allocation to real estate is expected 31 Building strong preference for core assets due to COVID-19, GBD office to continue to encourage investment activity in Korea. Biggest deal | USD390M | Office transaction prices continued to post robust rises. Recent The market cap rate in Q2 was about 3.5%. Cap rates trades have achieved in excess of KRW30 million/py. Notably, have compressed in recent years and we expect further the sale of The Pinnacle Yeoksam Building recorded a new tightening going forward for core product due to record unit price (KRW40 million/py) for Korea. The GBD competition among investors. • Office has consistently showed the lowest vacancy rate among the three major office districts due to tech occupiers’ preference • Industrial for the area. Major movers of the quarter • Office Key market deals • Industrial 31 Building The Pinnacle Yeoksam Building O2 Tower Sectors to watch Location: CBD Location: GBD Location: YBD Value in USD: 390 million Value in USD: 175 million Value in USD: 297 million Size: 35,203 sq m Size: 14,456 sq m Size: 44,860 sq m Buyer: IGIS AMC Buyer: Pebble Stone AMC Buyer: IGIS AMC Harold Lee Senior Director | Capital Markets & Investment Services Seller: NH Amundi AMC Seller: IGIS AMC Seller: Samsung SRA AMC [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 13
Home Melbourne • Industrial • Office Predictions about an improvement in trading conditions compared to last • Education year appear to have come true in the second quarter of 2021, with a number Major movers of the quarter of landmark deals announced, including two transactions of government- leased long WALE assets, in Melbourne’s metropolitan market. • Office • Agriculture Review Forecast • Development Market Q2 was a busy quarter across all geographic sub-markets A number of campaigns are already expected for Q3 across Sectors to watch and the capital stack. In the CBD, Lendlease concluded the value-add and core plus sub-markets within the Melbourne their acquisition of 469 La Trobe Street (part of AMP’s CBD and Docklands area. Outside of the CBD, St Kilda Road Swiss Re portfolio), being the adjoining owner and Futuro will continue to be a focus with 570 St Kilda Road poised to hit consolidated two strata allotments to create a major the market in July. We expect a number of large leasing deals CBD freehold at 235 Bourke Street. In Metro Melbourne, will be formally signed and filter through the market, triggering two long WALE government-leased assets were acquired some new developments within the next supply cycle. For by Centuria and Charter Hall while the Alfred Hospital these deals, face rents are expected to hold but will be announced the acquisition of 545 St Kilda Road. The underpinned by large incentives, which are expected to remain property will be developed into a world-class melanoma the norm for pre-commitment deals in the near term. treatment and research facility, which in turn is expected to transform the precinct and attract increased demand from John Marasco life-sciences occupiers. Managing Director | Capital Markets & Investment Services Key market deals State Chief Executive | Victoria [email protected]
469 La Trobe Street 913 Whitehorse Road 1 McNabb Ave Oliver Hay Location: Melbourne CBD Location: Box Hill Location: Footscray National Director | Capital Markets Value in USD: 152.7 million Value in USD: 114.7 million (50%) Value in USD: 168.5 million [email protected] Buyer: Lendlease Size: 26,052sqm Buyer: Centuria Seller: AMP Capital Buyer: Charter Hall Seller: Grocon Anna Cavar Associate Director | Capital Markets Seller: AIP Asset Management [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 14
Philippines Home • Residential The country’s economy tumbled for a fifth consecutive quarter in Q1, shrinking • Office 4.2%. Economists attributed the decline to the imposition of stricter lockdowns in Major movers of the quarter Metro Manila and neighboring provinces. Credit rating firms, multilateral lenders and government agencies have downgraded their economic forecasts for the year to growth of 4.5% to 7.9%, from 5.9% to 9.6% previously. We expect recovery to hinge • Industrial on the government’s accelerated COVID-19 vaccination program. • Office
Office space absorption remained negative for the fourth in Q2, up from only 1,665 units completed in Q1 2020. We consecutive quarter in Q2 due to lease cancellations, expect completion to further increase with about 10,387 units • Retail Sectors to watch early terminations and non-renewals. Net take-up totaled scheduled for completion by year-end. The Bay Area and Fort -52,800 square metres (-568,100 sq feet) as traditional, Bonifacio are likely to account for 86% of new supply. outsourcing and offshore gaming firms all continued to vacate office space. This was down 142% compared to the Subdued office space absorption also likely affected residential 125,200 sq metres (1.3 million sq feet) of net take-up posted demand. This has resulted in residential vacancy increasing in Q1 2020. to 16.3% in Q2 from 15.6% in Q4 2020. We see vacancy rising further to 17.2% by year-end due to the significant number of Among the firms taking up space were e-commerce new completions. companies such as Amazon and Shopee, outsourcing firms and data centres. We expect firms from essential segments Launches in the pre-sales market dropped by 43% YoY to only such as healthcare and logistics to lead office take-up in the 4,404 units. Take-up during this period reached 5,358 units, next 12 months. also down 53% YoY. During the quarter, mid-income to luxury projects continued to dominate, accounting for 97% In our view, office leasing recovery in 2021 is likely to hinge of launches and 98% of take-up. Given the minimal effect on the pace of COVID-19 inoculation, especially the inclusion the economic slowdown has had on demand for projects of outsourcing employees and economic zone workers in the in these price segments, we believe higher-priced joint priority list; the implementation of the government’s recovery venture developments between local and foreign developers package including the social amelioration program (SAP); as offering innovative facilities and amenities are likely to help well as developments in the recently enacted tax reform law. drive demand until the end of the year. We also expect the Paul Chua government vaccine rollout and the subsequent re-absorption Director | Capital Markets & Investment Services [email protected] In the residential sector, we recorded delivery of 4,415 units of office spaces to help prop up residential demand. Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 15
Shanghai Home 10 Shanghai saw 10 transactions in Q2 with a total value of RMB13.9 billion En-bloc transactions (USD2.15 billion). End-users remained the most active buyers of office and business park assets, while investment transactions included apartment, data center, logistics and hotel projects. USD2.14B Combined value Review Forecast Offices and business parks accounted for five deals totaling End-users such as insurance companies, banks and securities 50.1% Equity of RMB5.87 billion. End-users accounted for four transactions firms will continue to seek properties for self-use in the CBD. totaling RMB5.69 billion, representing 97% of office and business Income-producing business parks will see active interest from Songjiang IDC park transaction value. Zhongtai Securities acquired Greenland both foreign and domestic buyers, with transactions expected in Biggest deal | USD923M | Data Center Bund Center A2, C2 for RMB2.74 billion and Noah Group the next few months. acquired Hongqiao Sunny Word Center for RMB2.2billion. Two business parks worth RMB757 million in total were acquired by end-users. Two apartment transactions were completed by domestic investors, including Xuhui Somerset Apartment, sold Business Park for RMB1.05 billion, and Inventec Apartment in the Pujiang area, Major movers of the quarter sold for RMB520 million. In logistics and data centers, Metro RE acquired a cold chain project in Qingpu District for RMB326 million, while GLP acquired a 50.1% stake in a data center in Songjiang District for RMB6.0 billion. • Office in CBD • Business Park Key market deals Sectors to watch Greenland Bund Center A2, C2 50.1% Equity of Songjiang IDC Hongqiao Sunny World Center Location: Huangpu District Location: Songjiang District Location: Minhang District Value in USD: 421 million Value in USD: 923 million Value in USD: 339 million Size: 26,000 sq m Size: 40,000 sq m Size: 63,114 sq m Buyer: Zhongtai Securities Buyer: GLP Buyer: Noah Group Betty Wong Managing Director | China Seller: Greenland Group Seller: CHT Seller: Sunny World Group [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 16
Singapore Home Galaxis Investment activity picked up strongly in Q2 with several significant transactions shaping the market, which was dominated by the privatisation of REITs and inter-party transactions (75% stake) reflecting the reorganisation of capital. Total investment sales grew 86.3% QoQ to close the Biggest deal | USD402M | Industrial quarter at SGD7.03 billion (USD5.2 billion). • Industrial Review Forecast
The industrial sector remained active with acquisitions and Going into 2H 2021, we will see continued interest from local and • Residential disposals. Soilbuild REIT privatised SBT involving 10 industrial foreign developers and investors as vaccinations gather pace Major movers of the quarter properties with a combined deal size of about SGD1.06 billion and help reopen Singapore’s property market. There is a strong (USD786.7 million) while ESR REIT was the most active, acquiring sense of confidence as business activity resumes amidst the a logistics property and divesting two non-core assets. Local largely remote-working environment. Meanwhile, the disruption developers picked up redevelopment opportunities through both caused by the pandemic is accelerating the transformation in real • Residential GLS and private processes. The super-luxury apartment segment estate and we envisage investors will seek out redevelopment saw a strong rise in demand, witnessing the sale of 32 units and a opportunities which allow them to future-proof their investments. 13.8% QoQ increase in average prices. High Net Worth Individuals The collective sale market is also poised to pick up in the second • Commercial also picked up 28 Good Class Bungalows (GCBs), a 60% QoQ jump half as more sites could be ready for launch even as developers Sectors to watch in total transaction value, reflecting the growing confidence in actively source land sites. Singapore as a safe haven. Investors continued to be optimistic about office space and sought buying opportunities with 108 Robinson Road being the latest purchase by PGIM at SGD143 million (USD107 million), or SGD2,608 per square foot on Net Lettable Area.
Key market deals
9 Penang Road (30%) Suntec City Tower 1 & 2 (multiple floors) Maxwell House (Collective sale) Location: 9 Penang Road Location: Temasek Boulevard Location: 20 Maxwell Road Value in USD: 219.6 million Value in USD: 146.2 million Value in USD: 206.1 million Size: 37,072 sq m Size: 7,292 sq m Size: 3,883 sq m Buyer: Haiyi Holdings Buyer: Unknown Buyer: Chip Eng Seng, SingHaiyi & Chuan Investments WeiLeng Tang Managing Director | Singapore Seller: Suntec REIT Seller: Suntec REIT Seller: Collective Sale owners [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 17
South China Home 8 There were five transactions recorded in Shenzhen worth RMB10.77 billion En-bloc transactions (USD1.66 billion) in total, with major deals including Ping An’s acquisition of the Vanke Cloud City portfolio, and the purchase of an office property in the Qianhai area by a domestic investor. Guangzhou meanwhile recorded three deals worth USD2.47B RMB5.27 billion, including two retail projects and one office deal. Combined value
Review Forecast Vanke Cloud City In Shenzhen, Ping An Insurance acquired 100% equity of the In Guangzhou, malls, logistics and healthcare facilities, and Portfolio Vanke Cloud City commercial portfolio. Shenzhen International data centers will be favored by investors. In Shenzhen, Biggest deal | Mixed-use Group purchased a 23,800 sqm office for RMB1.56 billion for self- investors are expected to continue to seek industrial renewal use, while CDL acquired 55% equity of a business park and China opportunities as well as self-use transactions. Merchants Shekou sold a 30,000 sqm office to a domestic investor in • Business Park Qianhai for RMB2.23 billion. In Guangzhou, Link REIT completed the acquisition of Happy Valley Shopping Mall, located along Huangpu • Industrial Renewal Avenue in Guangzhou Zhujiang New Town for RMB3.20 billion. Tai Major movers of the quarter United Holdings purchased a mall near Guangzhou Railway Station for RMB1.44 billion. In addition an end-user acquired a 12,000 sqm office in Poly Yuzhu Port for RMB632 million. • Retail • Logistics
Key market deals • Industrial Renewal Sectors to watch Vanke Cloud City Portfolio Happy Valley Shopping Mall China Merchants Prince Bay T5 Location: Nanshan District Location: Zhujiang NewTown Location: Nanshan District Value in USD: N/A Value in USD: 493 million Value in USD: 343 million Size: N/A Size: 90,113 sq m Size: 29,609 sq m Buyer: An Insurance Buyer: Link REIT Buyer: Joyee Investment Betty Wong Managing Director | China Seller: Vanke Group Seller: Zheshang AMC Seller: China Merchants Shekou [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 18
Sydney Home Office Office occupancy rates and leasing enquiries both improved over the first Major movers of the quarter two quarters of 2021 as workers continued to return to their offices across the Sydney CBD. • Office Review Forecast • Industrial As confidence levels rise and markets reopen, they are In the upcoming quarter we expect current campaigns to Sectors to watch allowing vendors and investors the ability to review remain on hold and volumes in the CBD to be limited until acquisitions, further enhancing the overall business the current restrictions in Sydney subsides and the situation environment. Investor demand is evident across investment stabilises. The recent Sydney restrictions may delay some grades in 2021 with the weight of capital looking to be placed decisions, however the momentum gained over the first within Sydney providing an uplift to investor demand and half of 2021 and the confidence of overall market conditions driving investment activity moving forward. The second means this is more of a momentary delay as opposed to any quarter of a year is typically a medium-volume quarter for activity being placed on hold indefinitely. As the vaccine rollout investments in Sydney, a trend that continued in 2021 with a continues it will help to improve confidence across investment limited number of major transactions taking place during this grades with core-plus and value-add investors becoming more period in the CBD. Meanwhile, investor appetite continued to active in the Sydney CBD in line with benchmarks set within be strong for core-grade assets with capital finding comfort in the occupancy markets. medium- to long-term investments in well-located products.
Adam Woodward Head of Office Capital Markets Key market deals [email protected]
1 Bligh Street, Sydney (33%) 400 George Street, Sydney (25%) 68 Waterloo Road, Macquarie Park James Barber Location: NSW Location: NSW Location: NSW National Director | Capital Markets Value in USD: 282.8 million Value in USD: 218.7 million Value in USD: 80.3 million [email protected] Buyer: Dexus Size: 51,222 sq m Size: 13,486 sq m Seller: CBUS property Buyer: M&G Buyer: Private Investor James Mitchell Director | International Capital Seller: Investa Seller: AMP Capital [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 19
Taiwan Home 4 Despite the surge in domestic COVID-19 cases since mid-May, the government En-bloc transactions raised its 2021 GDP growth forecast to 5.46%. Total transaction volumes for commercial property reached TWD27.5 billion (USD982 million) in Q2, representing a 37% decrease from the previous quarter, but 58% YoY growth. USD274M Combined value Review Forecast
Expansion needs from manufacturers remained active on the Taiwan’s Statistical Bureau revised up its export growth Chong Hong Cloud back of strong export growth momentum, particularly in the forecast for 2021 to 20.4% from the previous 9.58%. Demand semiconductor, electronic components, telecommunication, for industrial assets is expected to remain robust in H2 owing Building and logistics industries. Abundant capital and low interest to the continuing growth of the manufacturing, logistics, and Biggest deal | USD137M | Office rates also encouraged manufacturers to expand offices and data centre sectors. The investment market remains flush factories. As a result, occupational buyers continued to shop with capital, though market sentiment in H2 will depend to an • Office around and contributed the most to transaction volumes. extent on the management of the COVID-19 situation. Office and industrial assets made up over 90% of total • Industrial transactions for the quarter. In addition, land transaction momentum remained solid as developers were keen to • Development site replenish their land banks. Major movers of the quarter • Office • Industrial Key market deals • Development site Chong Hong Cloud Building Far EasTone Neihu Building Nangang Software Park Phase I Sectors to watch Location: Neihu Dist., Taipei Location: Neihu Technology Park, Taipei Location: Xizhi Dist., New Taipei Value in USD: 137 million Value in USD: 116 million Value in USD: 61 million Size: 25,913 sq m Size: 21,326 sq m Size: 9,315.71 sq m Derek Huang Buyer: ADATA Technology Buyer: MediaTek Inc. Buyer: Ampacs Corp. and its affiliates Executive Director | Seller: Chong Hong Construction Seller: New Century InfoComm Tech Seller: Ability Enterprise Capital Markets and Investment Services [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 20
Thailand Home Sigma Resort Thailand’s property market could see a increase of foreign investors thanks to a Biggest deal | USD17.2M | Hotel weakening currency even as the pandemic continues to impact the tourism and hospitality sectors. Further, the rise of inflation due to higher energy prices bodes well for real estate, which has typically fared well under inflationary conditions. • Hospitality • Office Review Forecast Major movers of the quarter While the office market remains stable, the hospitality industry We are expecting an increase in transaction volumes in continues to face enormous short-term challenges as inbound H2 2021. Because although Thailand has seen a resurgence tourism remains at extremely low levels. And while the Bank of Covid-19 and is experiencing lockdowns, the vaccination • Hospitality of Thailand continues to support hotel owners with repayment programme is proceeding as quickly as possible, which holidays, some owners still choose to sell. Thai developer should aid sentiment. Meanwhile, the need of owners to sell • Office APEX sold their Sigma Resort Hotel in Jomtiem Pattaya to coupled with buyers returning to the market should translate Sectors to watch Asset World Corporation, which will rebrand the property to higher activity levels, particularly in the hospitality sector. as Four Points by Sheraton, for a price of THB550 million We also expect to see more joint ventures between Thai and (USD17.2 million). This year has also seen the merger of international real estate investors across sectors. two Thai Banks, Thanachart and TMB, to a new bank called TTB and the full integration is expected to be completed in July 2021.
Key market deals
Sigma Resort Location: Jomtiem, Pattaya Value in USD: 17.2 million Size: 287 Keys Buyer: Asset World Corporation Barny Swainson Senior Director | Capital Markets Seller: APEX [email protected] Capital Markets | Asia Pacific Market Snapshot Q2 2021 | 21
West China Home Office Domestic buyers continued to focus on high-quality opportunities in Major movers of the quarter Western China and while some projects continued to be under negotiation there were no transactions closed in Xi’an or Chengdu in Q2. Office Review Forecast Sectors to watch
In Xi’an, end-users, including state-owned enterprises (SOEs) In Chengdu, end-users will remain active while investors are and banks, continue to be the main sources of demand in the expected to focus on opportunities in the office, retail and office market. But many of them are still carefully evaluating mixed-use sectors. whether to lease or buy an asset they need. Office investments slowed in Xi’an in Q2 , while investor demand for quality retail In Xi’an, institutional buyers will prioritise income-producing assets continues to be high. Overall, the market is constrained office assets in central areas. by the extreme scarcity of tradable projects.
In Chengdu, CBD Grade A offices continue to attract the attention of local buyers, such as SOEs and private investors. Several deals are under negotiation and expected to be closed in the coming months.
Keng Geng Managing Director | Southwest China [email protected]
Lily Li Managing Director | Northwest China [email protected] View our other recent Market Snapshots by The world of Colliers clicking on the images:
EMEA
Annualized Revenue Established in Managing $3.3B 66 2B Coming soon (US$) Countries (square feet)
North America
Lease/sale transactions Assets under management Comprised of 54,000 $40B 18,000+
Coming soon (professionals)
Note: All stats are for 2020, are in U.S. dollars and include affiliates For further information, please contact the following Capital Markets experts:
Terence Tang Jimmy Gu Hideki Ota Tang Wei Leng Asia East China Japan Singapore [email protected] [email protected] [email protected] [email protected]
John Marasco John Lin Bayan Kuatova Derek Huang Australia and New Zealand South China Kazakhstan Taiwan [email protected] [email protected] [email protected] [email protected]
Adam Woodward Jeff Cui Harold Lee Barny Swainson Australia – Sydney West China Korea Thailand [email protected] [email protected] [email protected] [email protected]
James Mitchell Nigel Smith Richard Kirke David Jackson Australia – Sydney Hong Kong New Zealand – Auckland Vietnam [email protected] [email protected] [email protected] [email protected]
Betty Wong Piyush Gupta Hammad Rana China India Pakistan [email protected] [email protected] [email protected]
Winter Yan Steve Atherton Paul Chua North China Indonesia Philippines [email protected] [email protected] [email protected]
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