Asia Pacific Market Snapshot
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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