Asia, 15 February, 2017 – Colliers International (NASDAQ: CIGI; TSX: CIGI), a global leader in commercial real estate services has released their 2017 Asia Pacific Property Outlook, which gives an in-depth forecast of the major property sectors across key markets in Asia Pacific, including China, Hong Kong, Singapore, India, Japan, Indonesia, Australia and New Zealand.
David Hand, CEO for Asia Pacific at Colliers International, commented on the report’s findings: “Despite some risks, the economic environment in Asia Pacific remains mostly healthy through 2017. China and India are both achieving real GDP growth of 6-7% y-o-y, and investment demand has been firm in most major Asian centres. Hong Kong’s economy has been improving due to strong domestic demand and Australia remains an appealing destination for global investors. In 2017, the continued weight of investment capital should further depress yields across Asia Pacific despite likely upward pressure on interest rates in various markets from now on.”
According to the report, Asia Pacific’s favourable economic conditions should underpin solid leasing demand for office property, however, only a few cities are seeing solid office rental growth, most notably Sydney and Melbourne, and to some extent Hong Kong. Increasing supply in several large Asian cities over the next few years looks set to push up vacancy rates and constrain rental growth.
Prospects for industrial property are also starting to improve across the region due to firm economies and expansion in e-commerce and logistics. In Australia, firming rents, rising land values and sharpening yields point to a robust outlook for industrial property in 2017, while industrial investors and developers are set to reap significant capital and land value growth from major transport infrastructure spending projects over the next four years.
The outlook for residential property is more mixed. After a year of strong increases in Asian residential property prices in many markets over 2016, prospects for 2017 look more subdued. However, in Australia, it is expected that the demand from owner occupiers will continue to grow in 2017, and investor interest should strengthen to replicate levels last seen in 2015, should interest rates remain low.
Hand concluded: “We are optimistic about the region’s prospects and, bar a few exceptions, believe that 2017 will be another positive year for the Asia Pacific property market. However, a potential risk for the Asian property markets lies in the US. While the near-term prospect of continued growth, rising interest rates and US dollar strength could well be positive for the region’s exporting nations, should threatened trade tariffs materialise, they may become a significant potential danger.”