​ Capital Markets & Investment Services

Asia Pacific Market Snapshot | Q2 2020

REGIONAL OVERVIEW

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.

REGIONAL TRENDS

 

Korea office sector maintains momentum

Transaction volumes for the quarter top USD2 billion

Taiwan commercial property gains on improving business sentiment

Total transactions climb 25% from Q1 to over USD500 million

Boost expected for India data centres

E-commerce expansion and rise of the work-from-home model expected to fuel investment in fast-growing sector

Gradual pickup expected in Japan hotel sector

Despite sharp declines in tourist numbers, investors remain interested in Japan hotels; markets with strong domestic demand set to lead a gradual regional rebound

China shows signs of recovery

Sentiment improves in key markets like Beijing, where transaction volumes jump 238% YoY

Market Overview

Beijing

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Beijing’s real estate investment market has been recovering since the city reopened in late April. Total transaction volume for the quarter was at USD1.3 billion, up 238% YoY with four transactions completed. Market sentiment is improving despite strict government measures to manage the effects of COVID-19.

Chengdu & Xi’An

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Most institutional investors are prudent about the West China market as they look for income-producing properties to reduce risks. In the coming quarter, investors will remain interested in such opportunities, particularly in the prime locations of Chengdu and Xi’an. Value-add retail opportunities in Xi’an will also be attractive.

hong kong

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Hong Kong showed signs of returning to normalcy as the expectation gap between sellers and buyers has narrowed. As China’s lockdown eases, there are signs of mainland Chinese investors returning to Hong Kong’s market with strong interest, which should help pick up investment volumes.

INDIA

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Real estate transactions in India fell short owing to the national lockdown for most of the second quarter; however, the commercial sector is likely to pick up as most of India’s large occupiers, such as technology players, international banks, and IT-enabled services providers, have yet to show a substantial change in requirements.

Indonesia

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Uncertainty amongst Indonesia’s investors remains high due to the effects of COVID-19. While local and foreign investors have capital ready, defensive strategies will remain in place until the ‘new normal’ for property demand and pricing is clear.

Japan

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The second quarter’s transactional figures showed a general slowdown in activity and a reduction in pricing in some sectors; certain asset classes have outperformed others, with logistics, offices, and residential remaining in favour against hotels and high-street retail.

KOREA

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The Korean office investment market has been stabilising as low interest rates and abundant fund flows continue. Asset owners continue to liquidate hypermarkets and department stores amid the rise of online commerce and the shrinking of offline retail sales.

Myanmar

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Despite the economic tumult provoked by the pandemic, investment activity in Myanmar has not ceased. Foreign investment in the real estate sector reached a total of USD895 million. The entry of new supply, office relocations, and deal signings led to relatively healthy occupancy and absorption levels. ​

PRD

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Overall, investment strategies for South China have not changed despite disruptions to investment rhythm. Rental departments, logistics, warehouse, and office sectors are likely to lead transactions in the upcoming quarter.

Philippines

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The full effects of COVID-19 will be reflected in the upcoming quarter; demand is expected to slow down with the lockdown imposed in Metro Manila. The Philippine central bank expects a sharp rebound in the country’s economy in 2021, with a growth rate of 7.8%, which could help lift the real estate sector, particularly office space, residential units, warehouses, and retail.

SHANGHAI

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The total transaction volume for the quarter amounted to USD2.1 billion, with the business park sector outperforming. In Q3, investors are expected to remain interested in business parks, value-add, and income-producing office and community retail opportunities.

​ ​ Singapore

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As the Singapore government implemented ‘circuit breaker’ measures that lasted for two months, transaction activity for the quarter came to a near-standstill. The industrial sector, however, remained resilient, with warehouses making up the bulk of transactions.

TAIWAN

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Taiwan was successful in managing COVID-19 and has shown signs of recovery, with a total transaction volume amounting to USD536 million, a 25% increase QoQ. The country’s industrial and office sectors may continue to benefit from both the US-China trade war and the effects of the pandemic.

​ Thailand

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The investment market was at a near-standstill for the quarter due to the effects of COVID-19. Domestic demand has cushioned the commercial sector as condo developers have shifted their focus to landed houses and townhouse developments.

​ Vietnam

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Even though COVID-19 affected many real estate sectors, including office space, industrial spaces and the residential market, Vietnam’s property market remained buoyant for the quarter with continued interest in all asset sectors from established ASEAN economies.

Auckland

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As New Zealand emerges from lockdown, confidence has been re-established as domestic-led recovery has started to show momentum. Low interest rates are also driving positive investor sentiment with strategic land holdings and high-quality premises that have strong covenants at the top of purchasers’ enquiry lists.

Brisbane

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A ‘wait-and-see’ approach has dominated the leasing and investment markets in Brisbane for the quarter. Solid infrastructure investment in the Brisbane CBD with Cross River Rail, Brisbane Metro, and the Queen’s Wharf Integrated Resort and Casino ​ is expected to support the reactivation of the local economy and the transformation and renewal of the city.

Melbourne

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Investor appetite for Melbourne remains strong with an increase in deal flow. Large acquisitions from both domestic and offshore institutions across the office and logistics asset sectors have signaled the strength of Australia’s east coast as a capital destination of choice within APAC.

Sydney

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Office transactions were low in Sydney in the second quarter. In the second half of the year, core grade assets will garner the most attention from investors given the limited adjustment post-COVID-19, along with the ability to recapitalise existing holdings.

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 | Q1 2020

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The effects of the continuing COVID-19 pandemic 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.

 

 

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.

 

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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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