Hong Kong, 31 January 2019 – Colliers International (NASDAQ: CIGI; TSX: CIGI), a global leader in commercial real estate services, today released its Asia Market Snapshot Q4 2018 report. This multi-sector report examines the prior quarter’s property market performance in 15 Asian markets and provides forecasts for the quarter ahead.
Terence Tang, Managing Director of Asia Capital Markets and Investment Services at Colliers International, commented: “While 2018 ended on an unsettled note for many investors, cautious optimism continues to prevail in the face of economic and geopolitical uncertainty. Property markets across the region remain relatively vibrant and diverse, supported by reforms and new infrastructure improving access to outlying areas.”
Japan emerges as a market to watch
Continued optimism and belief in the stability of Japan’s economy is expected to trickle into the first quarter of 2019. Office transactions continue to dominate, even as investors are being priced out of Tokyo’s Grade A office space as they shift their focus increasingly to lower-end properties and other markets such as Nagoya and Osaka.
China to see growth fuelled by improved infrastructure
In Beijing, decentralization is a key theme in the lively office market as the city’s government leads by example by moving to a new location and investing heavily in southern districts. Shanghai, with its plans to build nine new metro lines, is also attracting investment in office and retail properties in districts located away from the city centre. The Pearl River Delta, part of China’s ambitious Greater Bay Area plan, is counting on two new transport links - the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macao Bridge – that came online in Q4 to enhance connectivity and boost the allure of the region’s office and retail sectors.
Rising interest rates cast a cloud over Hong Kong
Sentiment in Hong Kong has been dampened by rising interest rates, with HIBOR (Hong Kong Inter-bank Offered Rate) reaching a 10-year high of 2.39%, and falling stock market. However, liquidity remains robust and demand for commercial and residential projects is expected to remain high in 2019.
Non-residential segments remain in focus in Singapore
The office sector led investments for the second consecutive quarter in Singapore while the residential market may remain subdued as government cooling measures take hold. The hotel sector looks set to perform well with robust tourist numbers boosting occupancy rates.
Trade tensions are a cloud with a silver lining
Interest is growing among Taiwanese manufacturers on the Mainland looking to move back home to sidestep the impact of the US-China trade tensions. Activity in the Taipei market is expected to concentrate on commercial properties, having clocked multi-year high transaction volumes. In Vietnam, industrial properties around Ho Chi Minh City are in high demand, and so are commercial and office spaces across other major cities, as Chinese companies hit by the trade tensions join investors from Korea, Japan and Singapore in seeking favourable deals.
Infrastructure, general elections eyed
Investors are keenly awaiting the outcome of crucial general elections in India, Indonesia and Thailand over the next few months. Each of these countries has steadily introduced recent reforms and improvements to infrastructure that have helped retain investor interest, but challenges remain. India’s housing market has been hit by a funding crunch, but land reforms and GST should drive demand for warehouse space. The Thai capital Bangkok is facing a housing supply glut, which will induce caution as well as a focus on mixed-use projects among developers. In Indonesia, projects are being delayed by sluggish sales ahead of the polls, even as optimism surrounds some of the infrastructure projects enhancing the country’s road, rail and port networks.
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