Asian markets look set to slow amid lower growth in China and emerging signs of a slowdown in the US. While these macroeconomic developments cloud the outlook for Asian property, opportunities remain for occupiers and investors. More positively, interest rates ought to increase more gradually, holding funding costs low for developers and investors.
Colliers Head of Research for Asia Andrew Haskins presented his prediction on the key real estate opportunities in various Asians markets in 2019. Here are some selected highlights on Singapore and Hong Kong. Click here for the full report.
- Singapore to remain Asia’s firmest office market. In 2019, with a lower but benign real GDP growth forecast of 2.5%, Colliers thinks demand will stay firm; and the government’s push to promote technology, innovation and R&D will help feed growth in the market. With reduced new CBD Grade A office supply over 2019–2021 and the continued tightening of vacancy should support rental growth.
- Logistics market stabilizing. Colliers expects demand to improve in 2019, with e-commerce a key driver, as the market steadily absorbs the supply influx of 2017 and H1 2018. However, uncertainty arising from the US-China trade dispute and global slowdown will probably weigh on the sector.
- Upside for rents on Orchard Road prime shopping centres. In 2019, Colliers expects ground floor retail rents in prime shopping centres along Orchard Road to rise by 1–2% YOY, due to the lack of new stock in Orchard Road, while prime floor rents in suburban Regional Centres should stabilise.
- Likely dip in Central rents should provide relief; CBD fringe areas offer amenity and lower rent. Colliers expects Central/Admiralty rents to drop by 3.8% in 2019, a healthy correction following growth of over 40% growth since early 2015. Central is still the preferred location for the financial sector and MNCs. On the other hand, rents in Kowloon East should benefit from active pre-leasing activities in 2018 and a lack of new supply in 2020.
- Conversion demand drives the sector. Colliers forecasts that rents and prices for Hong Kong industrial and logistics properties to grow by 8.4% and 5.4% respectively in 2019. This growth reflects lack of new supply and the government’s revitalisation scheme, which is lowering total industrial stock.
- Modest improvement continues in retail sector. For 2019, Colliers expects further recovery, with high-street rents rising by about 2% YOY and retail sales picking up by 5–7% YOY. New retail supply should increase to 1.26 million sq feet (117,430 sq metres) in core districts. Newly launched transport links in the Greater Bay Area of South China should continue to boost tourist arrivals. However, the slowdown in China’s economy may lower mainland tourists’ willingness to spend, particularly on luxury items.
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