​ Capital Markets & Investment Services

Asia Pacific Market Snapshot | Q3 2020

REGIONAL OVERVIEW

Property markets across Asia Pacific continued to regain momentum in the third quarter as investors bet on the region’s long-term potential.

REGIONAL TRENDS

 

KEY AUSTRALIA MARKETS SEE HEIGHTENED ACTIVITY

Melbourne's Western Core saw the sale of a Grade A office asset for AUD454 million (USD323 million) while a business park in Sydney was sold in an off-market transaction for AUD306 million (USD218 million)

singapore sees a return of investor confidence

Investment sales surge 78.0% QoQ to SGD3.99 billion (USD2.92 billion)

korea's accommodative policies, liquidity fuel transactions

Hyundai Marine & Fire Insurance Building sale fetches highest unit price (USD 8,000 per sq m) of any real estate transaction in Korea

Japan data centres gain appeal

Growing cloud services market encourages the development of data centres, especially in the Greater Tokyo area

markets gather steam across china

Transaction volumes picked up or held steady in key markets such as Shanghai, Beijing and southern China, aided by growing foreign investor interest

TAIWAN'S MANAGEMENT OF COVID-19 HAS A SALUTARY EFFECT

Commercial property transaction volumes reach USD2.3 billion, a 324% QoQ increase

Market Overview

Beijing

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In Beijing, policies and planning continue to support industrial park development and urban renewal. Grade A office demand has seen a rebound, with net absorption rising 37% QoQ. The share of acquisitions for investments exceeded those for self-use purposes both QoQ and YoY.

Chengdu & Xi’An

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From a GDP growth perspective, Chengdu and Xi’an were less impacted by COVID-19 in comparison to other markets. In Q4, end-users will continue to seek office space for self-use, while investors will look for income-producing opportunities, such as Grade A office space and higher yields in prime location.

hong kong

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COVID-19 and ongoing tensions between the US and China have weighed on Hong Kong’s property market, which witnessed a drop of 59% YoY in Q3 2020. However, mainland Chinese investors have viewed this as an opportunity to buy into the city’s properties at low prices.

INDIA

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Residential and strata office sales, as well as discussions on large commercial portfolios, picked up momentum in Q3 as restrictions were lifted. On the industrial side, demand for in-city fulfillment centres, warehouses in and around large cities, and data centres has increased significantly. ​

Indonesia

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With the re-imposition of social restrictions, COVID-19-led consumption shock will drive contraction and affect demand across all of Indonesia’s property sectors over the next two quarters. The downturn has, however, ushered more reasonable pricing and development opportunities for value-minded investors, particularly around emerging transit-oriented development hubs.

Japan

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The effects of COVID-19 continue to be felt, but a strong fiscal response from the government has kept many businesses open. The office and logistics sectors are also performing well. The hotel sector, however, continues to struggle from the absence of foreign tourism despite government subsidies keeping hotel rooms filled with domestic travelers.

KOREA

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Due to lower interest rates and volatility in the equity markets, the investment market has enjoyed a strong inflow of funds in Q3. Additionally, the low rates and an expansion of the fiscal policy as a response to COVID-19 are spurring demand for secure offices and pushing up prices in return.

Myanmar

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As at end-August, total foreign real estate investment surpassed USD895 million. Despite being a modest uptick from Q2, the number quadrupled from fiscal year 2019. Although COVID-19 has weakened recent investment inflows, investors with experience in frontier markets such as Myanmar remain cautiously optimistic.

PRD

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South China investors remained prudent in Q3 amidst general market uncertainty. In the upcoming quarter, income-producing business park and office property, rare logistics opportunities and property for self-use purposes are expected to lead the market.

Philippines

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Despite the effects of COVID-19, the Philippine government remains optimistic about the potential for recovery. Government agencies and credit rating firms are projecting Philippine’s economy growth of between 6 – 7.5% in 2021, indicating a positive impact on the property sector that can help stoke demand for office, residential and industrial segments.

SHANGHAI

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Q3 saw five deals totaling RMB5.2 (USD0.7) billion, with investment and self-use transactions at 70% and 30%, respectively. In the upcoming quarter, domestic investors and end-users will remain active. Investors will generally be focused on closing deals; the business park and office sectors are expected to lead transactions.

​ ​ Singapore

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Investment sales activity picked up momentum in Q3 as Singapore eased restrictions and gradually reopened its economy. Investment sales quantum surged 78% QoQ to reach SGD3.99 (USD2.92) billion for the quarter.

TAIWAN

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Taiwan’s economy continues to benefit from the outstanding handling of COVID-19, and the order-transfer effect triggered by the US-China trade tensions. Market sentiment improved significantly in Q3, with the persistently low interest rate environment making commercial property stand out with attractive yield spreads and lower risk.

​ Thailand

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International investors adopted the ‘wait and see’ approach in Q3 as they gauge the extent of re-pricing applicable considering the current recession. There has been no significant distressed selling in Q3, but hotels have had to contend with an ongoing drop in revenue from the lack of international visitors.

​ Vietnam

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Vietnam continues its forward trajectory of positive structural change towards a more stable emerging market. This transformation is creating opportunities for the property sector, particularly in residential for an emerging Vietnamese middle class, foreign investors and expats relocating to Vietnam.

Auckland

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Despite uncertainties and short-term disruptions to market conditions from COVID-19, low interest rates are fueling investment activity, especially for prime properties with strong covenants. The availability of quality and limited stock to purchase will likely elevate competition amongst experienced investors and drive values higher.

Brisbane

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In Brisbane’s real estate market, ownership is concentrated among institutional investors, a trend which underpins the resilience of the sector. For Q3, a ‘wait and see’ approach continues to dominate the leasing and investment markets for the city.

Melbourne

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Melbourne spent much of Q3 in lockdown, affecting the ability to conduct property inspections. Several deals struck earlier in the year have exchanged, signaling buyers’ appetite for Melbourne property to remain resilient.

Sydney

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The reopening of Sydney following a COVID-19 lockdown in Q3 has pushed the return to offices and witnessed an increase of stock from H1 to Q3. In the upcoming quarter, an increase in demand for office assets is expected, with core grade assets garnering the most attention from investors and landlords.

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

APAC Market Snapshot | Q2 2020

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Investor appetite and activity have held up and there are signs of recovery on the horizon despite market volatility and economic uncertainty continuing to weigh on property markets throughout Asia Pacific in the second quarter.

Asia Market Snapshot | Q1 2020

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The effects of COVID-19 were of course the main factor impacting the Asia Pacific property market in the first quarter.

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.

 

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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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