The yields offered on Asia Pacific are becoming more attractive due to low or negative yields on government bonds and the possibility of falling dividend yields for equity markets, Colliers International says. 

The firm's latest report, Asia Pacific Real Estate: Still Good Value in a Changed World | Part 1: A Comparison of Property Yields with Other Asset Classes, examines how economic recession and super-low interest rates have prolonged a global bull market in bonds, leading to a pile of negative-yielding debt worth perhaps USD13.0 trillion being created.

At a glance: 

•  Colliers has released new report on why there is still good value in Asia Pacific real estate
• Asia Pacific Real Estate: Still Good Value in a Changed World | Part 1: A Comparison of Property Yields with Other Asset Classes examines how economic recession and super-low interest rates have prolonged a global bull market in bonds, leading to a pile of negative-yielding debt worth perhaps USD13.0 trillion being created.
• According to the report, dividend yields on equities are higher than bond yields, with dividend yields for most large Asian equity markets ranging between about 2.0 per cent and 3.5 per cent.

The data indicates that among core APAC investment markets, government bond yields range from effectively zero for Japan at the low end, through 0.8 per cent- 0.9 per cent for Australia, New Zealand and Singapore, to 2.8 per cent for China at the high end. 

Dividend yields on equities are higher than bond yields, with dividend yields for most large Asian equity markets ranging between about 2.0 per cent and 3.5 per cent.

Singapore is an outlier with a yield of 4.9 per cent.

Source: Colliers International

But Colliers International Asia Head of Research Andrew Haskins told WILLIAMS MEDIA these yields were mostly under threat because the hit to profits from the recession eroded companies’ ability to pay dividends.

"Therefore, in comparison, yields of 2.8 per cent -5.8 per cent for prime/Grade A office assets (Hong Kong SAR lowest; Auckland highest) and 3.5 per cent -6.1 per cent for logistics/industrial assets (Hong Kong SAR lowest; Guangzhou and Singapore highest) in core APAC investment markets look attractive," he said.

Source: Colliers International 

"Rents are under pressure in various city office markets and a few industrial/logistics centres.

"However, the pressure is lower than the pressure on corporate profits in equity markets."

We will discuss rent growth prospects and our preferred property asset classes in greater detail in the forthcoming Part Two of this series." 

The second half of the report will be released in the coming weeks.

Click here to download part one.

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