Asia, 25 July, 2017 - According to a new report by Colliers International, the Capital Markets and Investment Services Asia Market Snapshot, the global economy has settled into a steady growth rate slightly above the post-crisis trend and growth over the remainder of the year is set to comfortably exceed current consensus forecasts.
Terence Tang, Managing Director of Capital Markets and Investment Services for Colliers International, Asia, commented: “Asia’s real estate growth continues to be underpinned by strong performances across traditional sectors such as office and industrial in the major markets. We have seen a number of record transactions in Hong Kong and Singapore in Q2, and this trend is forecast to continue throughout Q3, with growth expected to exceed forecasts for the remainder of the year. Additionally, we are seeing decentralised office assets becoming more active, especially in China, as well a reinvigorated hospitality investment market.”
Hong Kong’s real estate market has firmly established itself as the most expensive in Asia with a number of record-breaking transactions and all-time high CBD rents. Not surprisingly, the Hong Kong office market remained the strongest sector in Q2, with several record-breaking transactions concluded, including the sale of 11/F Worldwide House and 41/F Lippo Centre. Two major government commercial land sales were also concluded on top of the government land sales, including the Murray Road carpark which set a new record-breaking price per sq m for a commercial site sold in Hong Kong’s history. The local tourism and hospitality sector also saw a rebound in the recent months with a total of nine hotels sold within the last six months. Coming into Q3, investors should look out for new opportunities in decentralised retail, industrial and hotel properties.
Singapore’s investment market continued the momentum generated in Q1, with a total of USD7.5 billion in transactions, reflecting a YOY increase of 14.6%. In the residential sector, four parcels of residential land sold for a record-high price within just one month. The commercial sector was just as buoyant with two major transactions and the upcoming sale of the Beach Road site also triggered under the Reserve List of the Government Land Sales (GLS) programme. 30+ Collective Sales processes and few good land parcels for sale are under way, reinforcing the positive market sentiment around the Singapore office market.
Shanghai's office market remained active through Q2, particularly for domestic investors who accounted for seven en-bloc transactions with a combined value of around USD2.4 billion, all being office or mixed-use assets. In Q3, we expect the office sector to remain dynamic, and CBD, DBD office, and business park projects should remain the core focus for property investors. Additional sectors to look out for are RMB funds, local asset management companies and foreign institutions that are investment-ready.
In Q2, India saw the implementation of the long awaited regulatory reforms with the Real Estate Regulatory Act (RERA) and the Goods and Services Tax. With the new government’s new reforms in place, questions are arising as to whether real estate prices will go up across all sectors, especially the residential market. While the rules for stricter compliance rules and more transparency are likely to impact prices of new projects, we do not expect much change for ongoing projects due to the substantial inventory overhang in the market. Demand for commercial office and retail space continued to drive flows from institutional players. For the rest of the year we expect the warehousing sector to emerge as an increased number of players are looking to disrupt the largely disorganised logistics market in the country.
The industrial and logistics sector saw increased activity as manufacturers, logistics companies and industrial office developers are all looking for good long-term investment opportunities, particularly in countries such as Taiwan, India, Indonesia, Thailand and Philippines.
The tourism and hospitality sector is also picking up some good momentum, particularly with an increased number of visitors and an unprecedented high number of hotel transactions in Hong Kong. We also expect the land and hotel deals to grow further in Thailand and Vietnam.
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