Asia Pacifi c – Q2 2019 REPORT Savills Research Investment Quarterly Asia Pacifi c Investment Quarterly Asia Pacifi c Network Savills Asia Pacific Network Asia Australia Hong Kong Taiwan Adelaide Central Taichung Brisbane Quarry Bay (3) Taipei Canberra Tsim Sha Tsui Gold Coast (2) Thailand 5 Gordon India Bangkok Lindfield Bangalore Gurgaon Vietnam 41 Melbourne Offices Notting Hill Mumbai Da nang Parramatta Hanoi Perth Ho Chi Minh City 2 Roseville Indonesia St Ives Jakarta Sunshine Coast Sydney Japan Turramurra Tokyo 3 Macau Cambodia Macau Phnom Penh * Malaysia China Johor Bahru Beijing Kuala Lumpur & New Changsha Penang ia Z Chengdu l e New Zealand a a Chongqing r Auckland t la Dalian s Christchurch n Guangzhou u d Haikou A Philippines Hangzhou Makati City * Nanjing 18 Bonifacio Global City * Shanghai Offices Shenyang Shenzhen Singapore Tianjin Singapore (3) Wuhan Xiamen South Korea Xi’an Seoul Zhuhai *Associate Office Savills is a leading global real estate to developers, owners, tenants and organisation supported by excellent service provider listed on the London investors. negotiating skills. Savills chooses to Stock Exchange. The company, focus on a defi ned set of clients, off ering established in 1855, has a rich heritage These include consultancy services, a premium service to organisations with unrivalled growth. The company facilities management, space planning, and individuals with whom we share a now has over 600 offi ces and associates corporate real estate services, property common goal. throughout the Americas, Europe, Asia management, leasing, valuation and Pacifi c, Africa and the Middle East. sales in all key segments of commercial, Savills is synonymous with a high- residential, industrial, retail, investment quality service off ering and a premium In Asia Pacifi c, Savills has 59 regional and hotel property. brand, taking a long-term view of offi ces comprising over 25,000 staff . real estate and investing in strategic Asia Pacifi c markets include Australia, A unique combination of sector relationships. China, Hong Kong, India, Indonesia, knowledge and entrepreneurial fl air Japan, Macau, Malaysia, New Zealand, gives clients access to real estate Singapore, South Korea, Taiwan, expertise of the highest calibre. We Thailand and Viet Nam. Savills provides are regarded as an innovative-thinking a comprehensive range of advisory and professional property services savills.com/research 2 Asia Pacifi c Investment Quarterly Content China (Northern) - Beijing 04 China (Northern) - Tianjin 05 China (Western) - Chengdu 06 China (Southern) - Guangzhou 07 China (Southern) - Shenzhen 08 China (Eastern) - Shanghai 09 Hong Kong 10 India 11 Indonesia 12 Japan 13 Macau 14 Malaysia 15 Philippines 16 Singapore 17 South Korea 18 Taiwan 19 Thailand 20 Viet Nam 21 Major transactions Q2 2019 22 3 Asia Pacifi c Investment Quarterly China (Northern) - Beijing The en-bloc investment market posted a stable performance surge of 268% quarter-on-quarter (QoQ) and 152% year- Spring Cao in Q2/2019, with a total of fi ve deals concluded for a Senior Director, Investment on-year (YoY). Total transaction area reached 178,800 sq Savills Northern China combined consideration of RMB4.28 billion. Activity was m during the quarter, up 6.3% QoQ though this was down +8610 5925 2048 scattered across multiple asset classes and included offi ce, 24.7% YoY. Total consideration reached RMB5.96 billion, [email protected] department store, hotel, development site and cloud data up 15.1% QoQ and 6.3% YoY. Average transaction prices storage centre acquisitions. Domestic buyers and sellers continued to rise by 8.3% QoQ and 41.1% YoY to RMB33,319 accounted for all deal activity during the quarter. Equity Vincent Li per sq m. Associate Director transactions were the most popular deal structure. Major New supply in the fi rst-hand strata-title retail market Research & Consultancy transactions included: +86 10 5925 2044 reached 52,100 sq m in Q2/2019, up 94% QoQ and 48.4% [email protected] • Bank of China Group Investment Limited purchased the YoY. Total transaction area reached 176,900 sq m in Grand Royal Canal C-01 Tower in Tongzhou district. Q2/2019, up 68% QoQ though this was down 15.6% YoY. The offi ce asset traded hands for a total consideration of Total consideration registered RMB4.52 billion in Q2/2019, RMB2.956 billion. up 37% QoQ, although marginally down 2.2% YoY. Average • People.cn, a state-owned news website, acquired a 100% transaction prices were down by 18.5% QoQ to RMB25,545 equity share of the Atecsys Data Center in Shunyi district per sq m, though this was up by 15.8% YoY. for a total consideration of RMB252 million. Impacted by the current urban planning policies, the • COFCO Property acquired a 49.91% equity share in new supply of commercial assets in prime districts in development site COFCO Jingxi Xiangyun Project. The Beijing will be very limited in the future. While traditional equity stake was purchased from Minmetals Land for asset classes such as the offi ce, retail and hotel markets RMB1.076 billion. will continue to remain popular investment targets, a • Landsea Green Group and Sunshine Insurance jointly lack of tradable assets will see astute investors expanding acquired a 100% equity share of Plaza Hotel from China their investment horizons and focus. It is expected that Shipbuilding Industry Co Ltd. While consideration for institutional investors will continue to shift away from the deal remains undisclosed the project is expected to be acquiring new supply to targeting the acquisition of refurbished and converted to offi ce usage. existing stock to achieve increasing rental returns and The fi rst-hand strata-title offi ce market received 175,000 improved asset values through project conversion or sq m of new supply in Q2/2019, marking a signifi cant upward refurbishment. En-Bloc Investment Volumes, 2009 to Q2/2019 70 Q1 60 Q2 50 Q3 40 30 Q4 RMB BILLION RMB 20 10 0 2014 2015 2016 2017 2018 2019 Source Savills Research & Consultancy Major Investment Transactions, Q2/2019 PROPERTY LOCATION PRICE BUYER USAGE Grand Royal Canal C-01 RMB2.956 bil/ Bank of China Group Tongzhou Offi ce Tower US$430 mil Investment Limited COFCO Jingxi Xiangyun RMB1.076 bil/ Development Fangshan COFCO Property Project US$156 mil site RMB252 mil/ Atecsys Data Center Shunyi People.cn Data Centre US$37 mil Source Savills Research & Consultancy savills.com/research 4 Asia Pacifi c Investment Quarterly China (Northern) - Tianjin Supply levels of new land in Tianjin rose by 15% quarter-on- were put to auction in May 2019. The two plots were put to Andy Chee quarter (QoQ) and 35% year-on-year (YoY) to 6.96 million market as a package with a hard fl oor price set at RMB2.55 Senior Director Savills Tianjin sq m by the end of Q2/2019. In line with the decentralisation billion and a ceiling of RMB3.53 billion. The winning bid +86 22 5830 8888 trend in the market, the majority of new land parcels went to Huayu for a total consideration of RMB2.89 billion [email protected] continued to be located in fringe and suburban areas, which and an accommodation value of RMB8,830 sq m. accounted for 59% and 19% of total new supply, respectively. • A residential plot, located in Xiqing district, was acquired The supply level in Binhai New Area spiked signifi cantly Vincent Li in June 2019. The plot covers a total area of 60,564 sq m Associate Director compared to previous quarters and accounted for 21.5% of the and is positioned for low-density residential usage with Research & Consultancy +86 10 5925 2042 total. Meanwhile, the city core area continued to see a supply a plot ratio ranging from 1:0 to 2:0. China Merchants drought, with only one plot of 95,522 sq m—which accounted [email protected] Property won the bid paying the ceiling price of RMB1.34 for 1.5% of the total—released on the market during Q2/2019. billion, refl ecting an accommodation value of RMB11,038 Total transaction volume reached 5.3 million sq m during sq m. Q2/2019. While this refl ected a 23% drop-off in buyer demand Following the trend seen in 1H/2019, the market is from the previous quarter, it should be noted that this was up expected to see robust buyer demand and consequently a signifi cant 57% YoY. Buyers displayed an even appetite for signifi cant transaction volumes in the latter half of the all locations in the city, with fringe, suburban and Binhai New year. Fringe and suburban areas will continue to receive the Area accounting for 31%, 33% and 34% of total transaction greatest allocation of new supply and, as a result, market volume, respectively. As expected, the rare allocation of prices are expected to remain largely stable, given their new supply in the city core was met with eager demand and decentralised locations. Comparatively lower pricing points was acquired during the same quarter. Plots positioned for on these plots is likely to garner increased interest from commercial or residential usage continued to represent the small- and medium-sized developers in the future. majority of transactions. Major transactions included: • Two neighbouring land plots in Haihe Education Park Land Supply And Transactions By Area, Q1/2011 to Q2/2019 City Core Supply Suburb Supply Fringe Supply Binhai Supply City Core Transactions Suburb Transactions Fringe Transactions Binhai Transactions 10 9 8 7 6 5 4 MILLION SQM 3 2 1 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source Savills Research & Consultancy