Large commercial acquisitions completed; strata offices witnessed stronger demand as investors look beyond core to development/build to core models
Gurugram, 21 April 2021 – Leading diversified professional services and investment management firm Colliers (NASDAQ and TSX: CIGI) today released its Asia Pacific Market Snapshot Q1 2021 report, which examines the previous quarter’s property market performance in 19 Asia Pacific markets, and provides forecasts for the current and upcoming quarters.
India | Appetite for in-city fulfillment centres, warehouses & data centres remains robust
Market activity picked up in the residential sector while the industrial sector enjoyed further growth. Due to continued work from home policies, residential sales remained strong and were further supported by low mortgage rates, state government benefits and developers offering discounts to clear unsold inventory. Leasing activity has started picking up and overall absorption for the year will likely be higher than last year although we expect office occupiers are likely to remain indecisive on fresh offtakes due to uncertainties around the return to work. The industrial and warehousing sector continues to attract investment and occupiers, with the share of organised logistics increasing due to the advent of e-commerce and India’s appeal as a global supply chain and manufacturing hub.
“Indian markets continue to attract capital while we witnessed large investments in the office sector by global funds in 2020 and the buoyancy continued and in fact its more broad based. In Q1 2021, we have witnessed large office deals in south India, office partnerships with global funds, equity in residential development and further, the success of a large IPO of a Mumbai based developer. The performance of Indian markets is in line with other Asian countries and investors now look at it more favourably,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers.
Large private equity and sovereign wealth funds remain bullish on commercial real estate over the medium to long term and are looking to invest in graded commercial assets, as well as forward purchase greenfield assets at attractive valuations. Due to balance sheet stress more land acquisitions/forward purchases are likely to be seen in markets like Bengaluru, Hyderabad, Pune and Mumbai. The continued positive performance of residential sector means more liquidity is likely to flow through the sector as credit funds, banks and global institutions look to deploy capital.
China’s economic revival renews investor demand
All key Chinese cities saw a flurry of deals in the first quarter as the country’s strong economic performance during a difficult year revived confidence among domestic and foreign investors. While Beijing recorded nine deals in Q1 - more than in the last six months of 2020 combined - Shanghai saw 11 deals, mainly in the office and business park segments. Four deals each were finalised in Chengdu and Xi’an while the industrial sector did well in southern China, with Guangzhou witnessing a record deal worth RMB7.23 billion (USD1.1 billion) involving Blackstone for the largest logistics park in the Greater Bay Area.
Industrial assets anchor Hong Kong market recovery
Industrial asset investments picked up in Q1 with volumes rising 191% over Q4. The heightened activity was aided by the removal late last year of double stamp duty on commercial transactions. A new government initiative to encourage the redevelopment of industrial buildings will also support the market in the months ahead. Industrial subsectors such as logistics and data centres will continue to attract long-term capital while the residential segment will see growing interest from developers keen to make the most of resilient prices and pent-up demand.
Commercial, retail lead the way in Singapore
The industrial sector was the highlight of Q1, which saw the announcement of some notable deals following months of negotiations, and volumes climbed 19% QoQ to SGD3.56 billion (USD2.66 billion). We expect investor interest in commercial and industrial properties to rise further in the second quarter, as optimism grows about the resumption of normal business activities amid the ongoing rollout of vaccines. The retail sector will also attract investor attention, especially aimed at suburban malls that have withstood the challenges of 2020.
Download the Asia Pacific Market Snapshot Q1 2021 report.
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