Colliers International released its Asia Market Snapshot Q3 2019 report. This multi-sector report examines the prior quarter’s property market performance in 15 Asian markets and provides forecasts for the quarter ahead.

At a glance:

• Singapore property sector shows broad-based growth
• Singapore’s total transaction values in both the residential and office sectors increased significantly, by about 90% for both, with residential land sales topping Q3 transactions by only about 2% over that of office buildings
• FDI flows into India real estate continued in Q3
• Demand for office soared in South Korea with nearly USD2 billion transacted in Q3
• US-China trade tensions weigh on Chinese markets, creating opportunities for investors

Terence Tang, Managing Director of Capital Markets, Asia, commented: “Political and economic uncertainties and ongoing trade tensions largely kept sentiment cautious in the region’s property markets in Q3, contributing to declining transaction volumes in major cities including Shanghai and Hong Kong. That said, prices in bellwether markets like Singapore have held up relatively well, a trend that is expected to continue in the run-up to the end of the year as funds and investors ride out the volatility.”

Tang Wei Leng, Managing Director of Colliers International Singapore, added: “Based on feedback and enquiries from investors, the office sector will continue to be highly attractive and we envisage a few more acquisitions to be completed before the year ends. Prime office assets in the CBD remain appealing given Singapore’s strong foothold as a financial hub. That status is coupled with other contributing factors, such as rental growth, low vacancies and limited new supply. Additionally, older buildings qualified for the Urban Redevelopment Authority’s rejuvenation schemes could encourage further interest in unlocking the investment potential of the city’s older buildings for redevelopment.”

Office, industrial sectors stand out

Office and industrial sectors remain vibrant in many markets. In Singapore, transactions in the office sector posted strong growth in Q3 with more acquisitions likely before year-end. Similarly, in Korea, office transactions are expected to exceed 10 trillion won (USD8.5 billion) again this year and Seoul’s Yeouido Business District is emerging as a particularly active location.

Retail grapples with geopolitics in Hong Kong and beyond

Despite ongoing protests, there is optimism in Hong Kong’s property market, with local developers remaining active in Q3 and CK Holdings’ application to develop 1,500 new residential units on a plot in Tai Po seen as a vote of confidence in the city’s future. However, retail has been especially hard-hit by a decline in visitor numbers, with significant price reductions for recent deals in the retail sector. In Japan, while the office sector continues to witness strong demand and competition among buyers in central Tokyo and Osaka districts, political pressures have also impacted retail, with a slowdown in Korean tourists due to tensions between the two nations.

Finding value in Chinese markets

While the trade war continues to weigh on key property markets in China, there remains no shortage of bright spots, particularly over the long term. In the Pearl River Delta, the government’s commitment to upgrading the region provides a sustainable base for future demand in the office, logistics and retail sectors. Chengdu is expected to see a slight rebound in Q4 as the office market continues to attract domestic and overseas investors. Likewise, investors are also keeping a keen eye on emerging opportunities in Shanghai and Beijing amidst geopolitical tensions.

Tech sector demand buoys office market in Korea

South Korea’s sluggish economy hasn’t put a dampener on demand for offices in Seoul as activity from tech firms and headquarter relocations are keeping the market stable. Prime buildings in Seoul’s CBD, Gangnam Business District and Yeouido Business District all saw increased take-up in the third quarter. Transaction volumes of Korean property investments have also received a boost from prolonged low interest rates and abundant liquidity. Further transactions are set to be completed before year-end.

Source: Colliers International