Prospects more challenging, but opportunities remain for occupiers and investors
Lower growth in China and emerging signs of a slowdown in the US cloud the outlook for Asian property. More positively, interest rates ought to increase only slowly, holding funding costs low for developers and investors.
Office rents should diverge in 2019, rising 8% in Singapore but falling 4% in Shenzhen. Singapore will stay attractive to occupiers despite rising rents, while CBD fringe areas of Hong Kong offer tenants amenity and lower rent.
Logistics should grow further this year, notably in China, where low vacancy is pushing tenants into Tier 2 cities.
Retail property is stable but faces long-run threats. After a likely 2% dip in 2018 from 2017’s record, we expect total property deals to slip 5% in 2019. Demand is firm, and we still see investment potential in office, logistics and business park assets