Capital Markets

Key Trends

• Investment sentiment remains subdued
• High interest rates continue to weigh on investor demand
• Office (-40% q-o-q) and industrial (-52% q-o-q) investment declines sharply
• Negative carry drives some motivated sellers to increase discounts
• Cap rates set to expand further over remainder of year
• Purchasing activity to remain muted but should resume in H2 2023
• Prices to undergo further downward adjustment

This report was originally published in https://www.cbre.com/research-and-reports?PUBID=CA8D02B3-3EA7-409C-B5BA-0BD91194CD6E

This report examines the investment capital flows to and from the Asia Pacific region in 2022, and highlights the key markets and sectors that saw notable inflows and outflows.

Key highlights include:

• India was the only market in Asia Pacific to attract more international capital in 2022 compared to the previous year.
• While Singapore remains the biggest source of capital in Asia Pacific, investment halved from 2021.
• Western investment in mainland China fell to just US$500 million in 2022.
• Interest and exchange rate volatility has eroded Asia Pacific investors’ appetite for U.S. real estate.
• U.S. investment in Asia Pacific slowed significantly due to sharp interest rate hikes in H2 2022.

This report was originally published in https://www.cbre.com/insights/reports/2022-asia-pacific-real-estate-capital-flows

Q1 2023 Singapore Figures report provides the latest commentary and data on net absorption, rents, vacancy, supply and other key metrics in Singapore’s office, business parks, retail, residential and industrial markets, along with an analysis of real estate investment activity.

Executive Summary:

• Office: The strong momentum amongst the office sector began to show signs of moderation as uncertainties within the tech and banking sectors grew.
• Business Parks: Rental increase for City Fringe took a pause as rents remained flat for the first time after seven consecutive quarters of increase. Rents for Rest of Island also remained flat in Q1 2023.
• Retail: Prime retail rents for all submarkets continued to rise in Q1 2023, buoyed by the recovery of the Orchard Road, City Hall/Marina Centre and Fringe areas and the resilience of the suburban market.
• Residential: Private home price growth saw an uptick amid low transaction volumes.
• Industrial: Amid strong competition for storage space in modern ramp-up developments, prime logistics saw the strongest rental growth of 3.7% q-o-q in Q1 2023.
• Investment: Preliminary real estate investment volumes in Singapore for Q1 2023 surged by 73.0% q-o-q (but down 40.9% y-o-y) to $6.068 bn, mainly on the large-ticket retail asset divestments by Mercatus.

This report was originally published in https://www.cbre.com.sg/insights/figures/singapore-figures-q1-2023

Q4 2022 Singapore Figures report provides the latest commentary and data on net absorption, rents, vacancy, supply and other key metrics in Singapore’s office, business parks, retail, residential and industrial markets, along with an analysis of real estate investment activity.

CHINA

“The year got off to a challenging start in China with a slowing economy and continued debt crisis exacerbated by lockdowns. Liquidity crunches may force developers to accelerate disposals at discounted rates while interest rate cuts and reduced quarantine periods should make investments more attractive.” – James Macdonald, China

HONG KONG

“In Hong Kong investment sentiment has stabilised as the local epidemic situation has improved but plenty of caution remains. Investors are keen to look for value-add strategies including redevelopment and conversion.” – Simon Smith, Hong Kong

INDIA

“Private equity investment in life sciences research and development real estate in India has gained momentum since 2021 and we expect to see further growth in the segment, owing to favourable policies, a large workforce, and cost efficiencies.” – Arvind Nandan, India

INDONESIA

“Positive figures for the Indonesian economy combined with an improved pandemic situation has revived sentiment in the property market with some sectors seeing higher absorption levels. Despite this rental and price levels have remained under pressure during the first half of the year.” – Tommy Henria Bastamy, Indonesia

JAPAN

“Overall, the Japanese real estate market continues to attract interest from overseas investors, thanks partly to a much weaker Yen, while some remain concerned about inflation and interest hikes, and are taking a wait-and-see attitude.” – Tetsuya Kaneko, Japan

PAKISTAN

“Pakistan loses almost 40% of its agricultural output to a lack of proper storage facilities. New developments in warehousing and cold chain facilities are being driven by the demand for higher standards and sustainability goals led by exporting firms and logistics operators.” – Nadine Malik, Pakistan

MALAYSIA

“Transaction activity in Malaysia during the quarter has been underpinned by interest in both the industrial logistics sector as well as sales of development sites and operating assets. With a number of notable deals scheduled for completion in the second half, the outlook is optimistic.” – Nabeel Hussain, Malaysia

SINGAPORE

“Although transaction volumes in Singapore were lower in Q2/2022, the latent interest in our real estate remains very high.” – Alan Cheong, Singapore

SOUTH KOREA

“Despite the heightened burden on investors from the upsurge in unit prices and the base rate, core investors continue to drive activity in the office sector.” – JoAnn Hong, South Korea

TAIWAN

“A surge in COVID-19 cases and the risk of interest rate hikes in Taiwan have negatively affected buyer confidence with both land and commercial property market activity slowing in the second quarter.” – Erin Ting, Taiwan

THAILAND

“Retailers are refocusing on key retail districts and the second quarter saw activity from major international brands. Despite the absence of Mainland Chinese tourists, the luxury retail market is proving surprisingly resilient.” – Thanjira Wongsathirayakhun, Thailand

VIETNAM

“The first half of 2022 saw several macro prudential policies from the State Bank pushed forward.  Not least is a review of foreign debt instruments, greater transparency around corporate bonds and a restriction in allocation of debt to real estate.  Whist there may be some short term pain for exposed borrowers, the overall long term health of the property sector will be substantially improved.”  – Troy Griffiths, Vietnam

This report was originally published in https://www.savills.co.jp/research_articles/167577/207793-0

Savills Asia Pacific Real Estate Investment Country Guide covers 13 countries around the region including:

• China
• Hong Kong
• India
• Indonesia
• Japan
• Malaysia
• Singapore
• South Korea
• Taiwan
• Thailand
• Vietnam
• UK
• US

This report was originally published in https://www.savills.com.hk/research_articles/167189/207024-0

Executive Summary:

• Office: The positive momentum from end-2021 carried over to Q1 2022 as Singapore remained on the path to reopen its economy.
• Business Parks: Occupier demand has generally improved across all submarkets, with islandwide business parks recording a positive net absorption of 186,982 sq. ft. in Q1 2022.
• Retail: While the recovery of the retail market was still capped by restrictions on social gatherings in most of the quarter, leasing activity continued to be stable.
• Residential: Private home price growth plateaued in Q1 2022 as cooling measures took effect. 1,716 new private homes (excluding ECs) were sold in Q1 2022, below the 5-year quarterly average of 2,614 units.
• Industrial: The industrial market experienced broad-based growth across all segments. Due to limited availability in existing prime logistics buildings, rents inched up by another 1.4% in Q1 2022.
• Investment: Preliminary real estate investment volume in the quarter amounted to $9.994 bn, reaching a 4-year quarterly high and just 5.2% below the Q2 2018 peak of $10.542 bn.

Inflation across the world has reached multi-year highs, driven by a confluence of demand and cost factors. Given Singapore’s small open economy as well as dependence on energy and food imports, the city-state’s overall inflation has picked up, rising to 5.4% yoy in March 2022, a decade high.

This report explores the implications of high inflation for real estate, and presents key strategies for owners, investors and occupiers to forge ahead in the inflationary environment. 

The Colliers Quarterly Reports for Q1 2022 reported that market uncertainties delay decision making and curtail transaction volume ahead of expected H2 recovery. Total investment volume slowed down along with the more stringent social-distancing rules in place since late January. Looking ahead, Colliers expects the investment market to remain slow in Q2 but believes market momentum and activities will likely improve in H2 2022. Office space demand weakened in Q1 2022, largely due to inspection activities being held up, resulted in the overall vacancy rate climbed slightly to 10.9% in the quarter.

Download the Colliers Quarterly Capital Market Report

Download the Colliers Quarterly Office Report

Supply chains and more specifically, the disruption of supply chains have never been more in the spotlight than since the onset of the COVID-19 pandemic. Supply chain teams around the world have been called upon to rapidly adapt to volatile conditions as lockdowns swept across the globe causing scarcity of product, which has also been subsequently compounded by acute bottlenecks.

The redesign of supply chain and logistics networks in light of geopolitical, technological, demographic and urbanisation trends has been especially prevalent over recent years to optimise the combination of supplier, manufacturing, inventory, storage, and distribution flows to meet the needs of customers in the most cost-effective way.

This report, The Role of Asia Pacific in Global Supply Chains External Link, is the first in a series by Cushman & Wakefield focussing on the impacts of disruption, customer buying behaviour and the underlying megatrends on the design of supply chain and logistics networks.

This report was originally published in https://www.cushmanwakefield.com/en/insights/the-role-of-asia-pacific-in-global-supply-chains