Colliers International today released its Asia Market Snapshot Q3 2018 report with a detailed overview of all property segments’ performance across 15 Asian markets during the third quarter of 2018.

At a Glance:

• Hong Kong’s industrial market shows strength
• Residential in HK, Singapore slows as policies tighten; investors look to commercial, industrial
• Infrastructure improvements enhance appeal of PRD
• Japan draws investors with wide yield gap
• Acquisition activity surges in Seoul

Terence Tang, Managing Director of Capital Markets and Investment Services at Colliers International, Asia, commented: “Market sentiment has become more cautious in some key markets due to more adverse economic and policy conditions. In Hong Kong, policymakers recently raised the key lending rate; Singapore has introduced more cooling measures targeting the residential sector; and authorities in Beijing unveiled new policies during the quarter tightening development restrictions in core areas. Nonetheless, we expect developers and investors to remain cautious overall rather than retreat from the market completely.”

“From regulatory changes that promise to pave the way for further investment in the retail sector in Myanmar and the Philippines, to planned mega mixed-use developments in Thailand and the opening of the Guangzhou-Shenzhen-Hong Kong Express Rail Link in the Pearl River Delta, there is a steady pipeline of opportunities emerging that will continue to draw interest even in a more challenging regional climate,” Mr. Tang added.

Elections in Indonesia

Indonesia’s Director of Capital Market & Investment Services, Mr Steve Atherton highlighted that campaigning for the 2019 presidential election is underway and public sentiment around investment during this election period is mostly wait and see. However, the property market will likely to continue on a soft trend through the next 2+ quarters. 

Foreign developers and investors continue to pursue new opportunities to establish joint ventures and lower-risk market entry strategies, mainly concentrated in the residential apartment space. In the industrial property market, with the growth of e-commerce and future expectations around the new port and new airport (both east of Cikarang and Karawang), there is much investment underway in strategic land for future industrial cities, as well as the planning for e-commerce growth and facilities that will be needed in-city and out. 

Related reading: AIIB approves USD $691.5 million loan to fund infrastructure projects

Move over residential: investors shift focus to commercial, industrial

While the outlook for residential projects in markets like Hong Kong and Singapore is growing less optimistic, the industrial and commercial sectors remain supported by a range of positive factors. In Hong Kong supply remains tight and a government revitalisation scheme is expected to boost appetite for conversion and redevelopment projects. Meanwhile in Singapore industrial acquisitions and divestments are likely to gain pace as industrial REITs move to shore up their positions, especially in specialised properties like data centres and ramp-up logistics facilities.

Related reading: Hong Kong reclaims most expensive world city crown

Gangnam still in style

Transaction prices in Seoul’s highly sought-after Gangnam business district show few signs of flagging, thanks to a tight leasing market and a relatively short supply of investment opportunities. Recent deals include the acquisition of the Samsung C&T Building by a consortium of Koramco REITs and NH Securities for KRW748 billion (USD696 million), which set a unit price record for South Korean commercial property.

Related reading: Commercial real estate transaction volume in Seoul reached 2.8 trillion won

Japan continues to draw investors

Market sentiment remains cautiously optimistic due to the central bank’s near zero interest rate policy. A wider yield gap, relative to other markets, should continue to attract more investors from the US, Hong Kong, and Singapore. Moving forward, the focus will continue to be on Tokyo’s office market. Lower than expected supply growth, coupled with larger than expected withdrawals for redevelopment, have contributed to the sector’s recovery.  

Related reading: Tokyo mid-market residential rents achieve 12-month growth

Retail resurgence in Myanmar, Philippines

Recent moves by the government to open Myanmar’s retail industry further to foreign investors will bring a promising and largely untapped sector into the spotlight. The retail market remains one of the strongest in Yangon, with around 90% occupancy and steadily rising lease rates. Given the city’s relative shortage of large-scale shopping and lifestyle venues, new destination retail establishments with recreation and entertainment features are likely to meet with robust local demand. A move by authorities in the Philippines to ease the minimum capital requirements for foreign retail investments should also encourage more players to enter the previously locally-dominated F&B and home furnishing sectors. 

Related reading: Growth in condo sales forecast despite lack of new developments

For more information about Asian real estate email Terence Tang, Managing Director of Capital Markets and Investment Services at Colliers International, Asia via the contact details below. 

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