Welcome to the 2016 Asia Pacific Property Outlook. Optimism reigns in Asia Pacific and capital flows continue to increase across the region. The focus remains firmly on China and the continued impact it has on all aspects of property activity. This ranges from the significant outflow of Chinese equity capital, the occupation requirements of mainland banks and their rapidly expanding debt portfolios and of course the impact of Chinese tourists’ spending. India is also expected to be a major player in 2016, not so much from the outflow of capital but rather the opening up of its domestic economy that will accelerate foreign investments into the country. In Australia, there is expected to be a resurgence in occupier demand nationally but in some city-markets, elevated levels of supply are off-setting the strong growth in tenant demand.
Investment by Australian groups offshore have more than doubled in 2015. In 2016 this growth in investment is expected to continue, albeit the types of investors will be different from the previous cycle in 2007 when it was dominated by Australian institutions. In the current cycle, these institutions are increasingly being funded by offshore groups.
By sector, logistics remains strong across the region, performing well from both an occupier and investment perspective. In offices, demand from Chinese occupiers is underpinning extremely buoyant office leasing markets in Hong Kong. There are however areas of concern which include cooling residential markets in second and third tier cities in China and high-end residential in Singapore.
Government legislation continues to influence markets and the impact can be both positive and negative. In India, a focus on affordable housing is creating opportunities in that market. A strong push by the Singapore government to develop itself as a high-tech hub is changing the type of development occurring in the nation state. More broadly, the dominance of China means that any changes to government policies in that country will continue to have ramifications throughout the whole region. The complexity and inter-connectivity of the Asia Pacific region continues to grow and we expect this trend to continue barring any major macro-economic or socio-political events that could derail the process.
We hope you enjoy reading our views on the Asia Pacific Property Outlook in 2016 and we welcome your feedback.