Singapore, 10 January 2018 – Colliers International (NASDAQ and TSX: CIGI), a global leader in commercial real estate services today released its 2018 Asia Pacific Property Outlook, which highlights brighter prospects for the property market in the region this year, supported by strong economic growth in 2017, particularly in China, Japan, South Korea, Hong Kong and Singapore. 

Improved economic conditions have boosted demand for leased office space, especially in Hong Kong but also in Singapore, the leading Chinese cities and in India. Demand for industrial and logistics property has strengthened for similar reasons. With overall demand for leased office and warehouse property set to stay strong, office and warehouse rents should rise further or at least stay reasonably stable, boosting cash rental streams to landlords and thereby supporting investment property demand.

Singapore
Investment sales are likely to stay robust in Singapore in 2018, following bumper transactions valued at an estimated SGD40.2 billion last year, where the residential sector accounted for 54% of the deals due to the strong demand for sites via public tender and the collective sale market. This was the highest annual investment sale value since the 2007 property boom.  

Meanwhile, the commercial property sector made up 30% of investment sales in 2017, driven by landmark deals including Asia Square Tower 2 which was sold for SGD2.09 billion, the Beach Road Government Land Sales (GLS) site for SGD1.62 billion and Chevron House in Raffles Place for SGD660 million.

Ms. Tricia Song (宋明蔚), Head of Research for Singapore at Colliers International, says: “Our preliminary data showed that investment sales in Singapore in 2017 rose by 54% year-on-year to SGD40.2 billion. This positive momentum should carry into 2018, with a strong start anticipated in the residential sector. As at January 10, there are 11 residential collective sale tenders closing in the next five weeks, including City Towers in District 10, and four GLS tenders due on January 30.”

The recovery in the private residential prices which started in the third quarter of 2017 looks set to continue this year. The current wave of collective sales could well accelerate price recovery in the near-term due to immediate incremental demand from displaced sellers and the large capital gains. Average home prices may rise by 17% over 2018-2021, supported by higher GDP growth, falling physical completions and ongoing collective sale deals.  
 
Colliers’ 2018 Asia Pacific Property Outlook report projects that Grade A office rents in Singapore could pick up by 5-7% in 2018 on the back of rosier economic outlook and recovering occupier markets, with increasing demand from new tenant segments such as coworking operators as well as technology and media companies.

Mr. Duncan White, Head of Office Services at Colliers International, says: “The demand for flexible workspace is expected to continue in 2018. However, there are very little commercial opportunities left in the market as operators secure service-exclusivity within the developments of choice. This limits the growth of flex operators and is a potential factor that could lead to further mergers and acquisitions, as well as consolidations of operators.”

The report also forecast a more positive outlook for business and industrial park market in Singapore against the backdrop of an improved manufacturing sector and the Government’s initiatives to transform industries and encourage adoption of new technologies.

2018 Asia Pacific Property Outlook
The report outlines the firm’s latest predictions on the property sector for the year ahead, focusing on the opportunities and risks in Asian real estate in 2018 around 10 key themes.

Top 10 Property Predictions:
1. Firm economic growth and persistent low real interest rates will continue to drive occupier and investment property markets in Asia. 2017 has seen the highest global real GDP growth since 2010; and in Asia growth momentum has strengthened in China, Japan, Hong Kong and Singapore, with India now also picking up. Since monetary conditions in most of Asia are very loose, we expect interest rate increases over 2018-2019 to have only a modest impact on property markets.

2. Reflecting firm growth and low real interest rates, property investment volumes in Asia will remain strong and yields may shrink even further. The chief risk to this view is not weak demand or availability of capital, but a shortage of high-quality properties available for sale.

3. Office rents in major centres will continue to rise or remain reasonably stable in 2018.

4. Flexible workspace will strengthen further as a major source of new office leasing demand, particularly in Hong Kong, Singapore and Tier 1 & 2 cities in China; we also expect significant growth in India, Jakarta and Bangkok.

5. Technology companies will strengthen their presence in the CBD and CBD fringe of major Asian cities in order to attract and retain top talent.

6. Higher trade flows and e-commerce will continue to drive industrial and logistics property in China, Hong Kong, Singapore and India with industrial property emerging as a key organised asset class across Asia.

7. The business and industrial park market will strengthen in Shanghai and Singapore, and take off over the next several years. 

8. Retail property rents will recover in Hong Kong after several years of weakness, though Singapore is less certain.

9. Residential property prices will rise further in Hong Kong and Singapore. Firm demand, limited supply, persistent negative real interest rates and promotional efforts by developers in the primary market are supporting prices in Hong Kong, while in Singapore we believe that the current wave of collective sales will continue rising through 2018 and into 2019, and that prime luxury residential sites will gain favour soon.

10. Black swan events: In our view, the greatest risk to property markets in Asia is a global or regional financial downturn prompted by high equity valuations--notably for US and Chinese technology stocks, and Chinese property developers. Other risks include faster than expected replacement of human roles by artificial intelligence within large enterprises, reducing demand for leased space, and geopolitical conflicts in Asia.

To view the full copy of the 2018 Asia Pacific Property Outlook report, click here



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Ms. Wong Siew Ying, Associate Director
Marketing and Communications Colliers International
Direct: +65 6531 8617
siewying.wong@colliers.com