​ cAPITAL MARKETS

Asia Pacific Market Snapshot | Q1 2020

REGIONAL OVERVIEW

The effects of the continuing COVID-19 pandemic were of course the main factor impacting the Asia Pacific property market in the first quarter. Signs of the outbreak weighing on sentiment were seen in markets across the region, however robust government stimulus packages and policies are cushioning impacts, and opportunities are emerging across many sectors in the region.

REGIONAL TRENDS

 

China commercial property shows resilience

Shanghai CBD office transactions rise 8% QoQ; Singapore’s GIC scoops up LG Twin Towers in Beijing for USD1.1 billion

Residential outperforms in Singapore

USD433 million deal for Irwell Bank Road development site was the biggest of the quarter

Strength seen in Korea office sector

Office transaction volumes reach USD1.7 billion in Q1 as multiple major deals close, including private equity giant KKR’s fourth deal in the country

Australia faces slowdown after banner year

BlackRock takes 50% stake in Sydney office asset for AUD120 million in a sluggish quarter

Hospitality hit by virus outbreak

Occupancy rates slide to 50%-65% in Japan amid high supply and tumble to as low as 20% in the Indonesian resort island of Bali; Vietnam sees wave of closures

Market Overview

Beijing

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Looking ahead into Q2, investors will continue to seek opportunities in Beijing’s investment market due to investment stock being available amid restrictions due to the COVID-19 pandemic. Investors will focus on properties that generate stable incomes or offer large value-add potential, and the office sector will continue to be in the spotlight.

Chengdu

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This quarter’s completion of Tianfu Software Park C2 demonstrates the resilience of demand for business park office space Government policies will also be put in place to support the industries in which business park office tenants are active.

hong kong

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Coupled with the effects of COVID-19, as well as political and economic uncertainties that affected Hong Kong in 2019, investment momentum remains slow as investors become more cautious and reluctant to take on risks. The upcoming quarter will continue to be a buyer’s market with weaker investment sales; however, discounted assets may create favourable opportunities for investors to reenter the market.

INDIA

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Given India’s robust growth outlook, private equity investment in local real estate is expected to rise in the upcoming quarters, with stronger growth expected compared to other major economies despite the COVID-19 outbreak. A continued pandemic and shutdown could lead to lower real estate valuations, allowing investors an opportunity to look for stressed assets.

Indonesia

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The COVID-19 pandemic has impacted the Indonesian economy greatly, with year-to-date real GDP growth recorded at 1% versus a forecast of 5.1%. A weakened currency will provide investors with significant discount-buying opportunities for new and foreign capital entering the market.

Japan

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Despite global uncertainty surrounding the COVID-19 pandemic, Japan’s real estate market performed well this quarter, with a likelihood of deflationary pressures over the course of 2020. The hotel sector will likely be the hardest hit due to the postponement of the 2020 Summer Olympics, resulting in an oversupply from falling tourist numbers.

KOREA

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The office investment market in Q1 2020 remains stable due to abundant liquidity and low interest rates amidst the COVID-19 outbreak. Office transaction volumes stood at USD1.7 billion this quarter, with the closure of major deals involving Samsung Life Building Yeouido and Namsam Square.

Myanmar

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The property market in Myanmar is expected to be resilient, with continued interest in the commercial sector and noticeable shifts towards the industrial segment observed this quarter. Investors have started looking at accelerating the use of automation in logistics and operations and building industrial parks, as well as reviewing land acquisitions.

PRD

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DBD and CBD transactions were79% and 21%, respectively. The largest transaction – the acquisition of China Merchants Central Plaza by Rhino Capital at USD353 million – accounted for 47% of quarterly transaction volume.

Philippines

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The pace of Philippine economic expansion could be threatened by the COVID-19 pandemic, with some growth estimates for Q1 2020 coming in at 3%. Coordinated policy response from the Philippine government and central bank is likely to instill confidence in the property market before ​ late 2020, assuming the outbreak peaks in H1 2020.

SHANGHAI

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Total transaction volume in Shanghai stood at USD1.1 billion, with resilience evident in the CBD office, DBD retail, and hotel sectors. In the upcoming quarter, Shanghai will remain a favourable market for both domestic and foreign investors with continued focus on income-producing and value-add properties.

​ ​ Singapore

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Since the introduction of fresh cooling measures in July 2018, the residential sector has outperformed other sectors in ​ Q1 2020 with the tender awards of five government land sale sites. Investors should focus on long-term key drivers and look for opportunities in logistics properties, good quality office buildings, and CBD residential in the aftermath of COVID-19.

TAIWAN

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Occupational buyers were major contributors in retaining Taiwan’s momentum, particularly in the industrial and office sectors, which accounted for 54% and 31% of total transaction volume, respectively. Interest rates are at their lowest since 2008 and this could provide buyers with great room for negotiation and opportunities for bottom-fishing.

​ Thailand

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The COVID-19 outbreak has led to a slowdown in market activity, with banks responding proactively to support Thai businesses. Savvy long-term investors are also looking to advance their initiatives in Bangkok at a time where there are fewer buyers in the market.

​ Vietnam

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While Vietnam finished 2019 on a strong note, the COVID-19 pandemic posed a major challenge for economic growth in Q1 2020, with growth rates reduced by around 1% to 1.25% from its 2020 target of 7%. Sectors that were most affected include F&B, tourism, hospitality, transport, agriculture, and real estate.

Auckland

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In the first two months of 2020, strong occupier demand for office space combined with supply constraints resulted in record-low vacancy rates. New leasing opportunities may become available due to the current climate and the office space segment will continue to be a highly attractive asset class.

Brisbane

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The COVID-19 outbreak has seen significant disruptions to new acquisition decisions and institutions are undertaking a revaluation of their real assets’ portfolios. Over-allocation to real assets, redemptions, and the denominator effect will be interesting to watch for the remainder of 2020.

Melbourne

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Melbourne began the year as the strongest office market in the country, with an average vacancy rate of 3.2% (2% in Prime category). Due to the COVID-19 pandemic, a softening in pricing is expected in the upcoming quarter and investors are anticipated to look most favourably on core assets with defensive tenancy profiles, rather than seeking secondary assets in distress.

Sydney

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Amidst the COVID-19 outbreak, Sydney’s focus in the short term is on the occupier market and how the Australian government’s stimulus package is received. The Australian cash rate saw two 25-basis point drops in Q1 to a record low of 0.25%, which is seen as a buffer for the credit market to provide support to the property market over short- to medium-term.

Brisbane

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The COVID-19 outbreak has seen significant disruptions to new acquisition decisions and institutions are undertaking a revaluation of their real assets’ portfolios. Over-allocation to real assets, redemptions, and the denominator effect will be interesting to watch for the remainder of 2020.

Melbourne

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Melbourne began the year as the strongest office market in the country, with an average vacancy rate of 3.2% (2% in Prime category). Due to the COVID-19 pandemic, a softening in pricing is expected in the upcoming quarter and investors are anticipated to look most favourably on core assets with defensive tenancy profiles, rather than seeking secondary assets in distress.

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OUR INSIGHTS

Asia Market Snapshot | Q4 2019

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The fourth quarter of 2019, marked by geopolitical uncertainty like the rest of the year, was a mixed bag.

 

 

Asia Market Snapshot | Q3 2019

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As expected, political and economic uncertainties and persistent trade tensions kept sentiment cautious in the region’s property markets in the third quarter.

 

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.

 

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For​ informationand​ inquiries,​ please​ contact​ us

Richard Kirke

New Zealand – Auckland

richard.kirke@colliers.com

 

 

 

CHINA

Tammy Tang

Managing Director | China

 

Jimmy Gu

China – East China

jimmy.gu@colliers.com

 

 

 

CHINA

Tammy Tang

Managing Director | China

 

Andrew Haskins

Executive Director | Research

Andrew.Haskins@colliers.com

+852 2822 0511

Sam Harvey-Jones

Managing Director | Occupier Services

Sam.Harvey-Jones@colliers.com

+852 2822 0509

Terence Tang

Managing Director | Capital Markets

Terence.Tang@colliers.com

+65 6531 8565

CK Lau

Managing Director | Valuation & Advisory Services

ck.lau@colliers.com

+852 2822 0665

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