The logistics sector in Asia Pacific remains the most active, with more cap rate movements expected in the coming months.
Cap rates were generally stable in Q4 2021 across Asia Pacific (APAC), with three of the 21 cities surveyed across APAC seeing quarter-on-quarter movements.
Industrial remained relatively active, while retail still hinged on the development of COVID-19 in most cities. The office sector remained generally stable across all markets except for Auckland.
Key Highlights in Q4 2021:
- The office sector in Seoul was generally flat. Despite concerns about rising interest rates when investors make their investment decisions, Seoul recorded the highest value office transaction of the year in Q4. On the other hand, we saw a decrease in cap rates in the industrial sector while values kept rising in Seoul. Demand stayed strong for industrial in Seoul, particularly in logistics, with less new supply in the pipeline as development licenses and permits are getting harder to obtain.
- In Auckland, low interest rates and high levels of market activity have resulted in the compression of industrial cap rates. Commercial office yields tightened slightly, while retail yields have remained flat as investors continue to take a more cautious approach.
- Logistics remained favourable with many investors, reflecting the strong demand and a consequence of the lingering effects of COVID-19 in many markets. We may see movement in more markets in the coming quarters.