Asia Pacific real estate market will see a year of capital relocation, study reveals
December, 2015
After experiencing of almost eight years of easy money from the world’s central banks, Asia real estate market will see a year of consolidation, with the most attention being paid to the markets perceived as offering certainty in terms of low risk and satisfactory returns in the region, according to real estate forecast study jointly published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC).
The survey polled through ULI members in the Asia Pacific region in the month of October through online questionnaire fill-ups, some 250 participants completed the survey in the pan Asia Pacific region during the month. With some 36 percent participants from Singapore, 15 percent from Hong Kong, 12 percent from China, 12 percent from Japan, 12.1 percent from Australia, 2.8 percent from India, 2.4 percent from Phillippines, 1.9 percent from South Korea.
Survey participants put Japan and Australia the favorite countries for investment and development, with Tokyo, Sydney, Melbourne and Osaka taking four of the top five spots for promising markets in the region. Ho Chi Minh City, rated fifth, rounds out the list of most favored markets.
Citywise speaking, survey respondents ranked Hong Kong fifteenth for investment prospects and fourteenth for development for 2016, placing the city near the middle of the list of the 22 markets covered by the report. The report noted that traditionally Hong Kong does not get high marks because of the scarcity of prime commercial assets for sale, and the high prices for the few properties that are available on the market, but the report says that interest may be picking up, but the optimism is limited to the central business district (CBD), which has benefited from Chinese financial companies opening offices there. The study says, the outlook is relatively pessimistic for Hong Kong’s retail sector, which has been affected by a steep drop in Chinese tourists; and sentiment is glum regarding the residential sector, which now features some of the highest prices in the world.
On transactional basis, Sydney and Melbourne are now the biggest real estate markets in Asia after Tokyo, with some USD 10.2 billion in new capital invested in the first half of 2015, according to Real Capital Analytics, a large proportion of it from foreign buyers, mainly China, Singapore, and Malaysia. About 30 percent of central business district (CBD) office assets in Sydney at present owned by offshore entities, according to broker Knight Frank.
The Real Estate Investment Trust (REIT) Sector in Singapore saw a significant selloff during the summer this year, rebounded coming into the end of the year, it still offers an attractive 6 to 7 percent yield. Australia has seen substantial buying activity from Singaporean REITs in 2015, with one especially large deal in the logistics sector. Singaporean REITs have also bought assets in Japan, China, South Korea during the year.
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