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As residential prices increase across the world, so too do transaction volumes. Commercial residential transactions for multifamily increased to the largest sector by investment volumes, at 28% of all transactions, overtaking offices for the first time in the first half of 2021. End-user residential also returned to pre-pandemic transaction levels nearly as soon as property markets reopened. The strength of residential property markets shows that home isn’t just where the heart is. 

Global real estate investment underwent a major shift in the first half of 2021 as the multifamily residential sector overtook offices to become the largest sector globally for the first time since records began in 2007, when considering deals over $2.5 million. Over the first six months of 2021, $136 billion was invested in residential, 35% higher than the same period in 2020 and 4.1% higher than office transaction volumes. Growth was driven by the global interest in the strong fundamentals for the residential sector. Many locations remain severely undersupplied for appropriate housing, particularly to meet the demand from younger people moving to urban centres.

In the end-user residential market, there were converging factors driving increased transaction volumes in many locations. From the race for space to the shift to working from home, many buyers globally decided that their current homes weren’t working for them. As soon as they were able, buyers made the choice to move to new properties, assisted by record low interest rates and government support for property markets. Across the 15 cities analysed for this article, 80% of the locations have seen transaction volumes above 2019 figures. 

A significant number of properties that transacted were purchased by mortgaged homeowners as price growth squeezed out first-time buyers while boosting the buying power of current owners. Roughly 45% of UK new buyers put their plans to buy on hold in 2020, as Covid-19 landed a double blow of rising house prices and constrained personal finances. The number of first home buyers taking out new home loans in Australia dropped to its lowest level in eight months in June 2021 to 13,869, though the number of home loans for all owner-occupiers fell in June as well, as Australia battles a new wave of Covid-19. 

This article was originally published in https://www.savills.com/

Will electric vehicles change the automotive world?

Electric vehicles (EVs) are steadily weaving their way into the fabric of our transportation. According to the International Energy Agency (IEA), over 10 million electric cars can now be found on the roads of the world; with over 125 million expected by 2030. Between 2010 and 2020, the cost of batteries has plummeted to close to a tenth of their original price and could halve again by 2030, only accelerating the adoption of the EV.

This article was originally published in https://www.savills.com/

Providing affordable and interesting workspaces is crucial to ensuring that cities are at the forefront of the tech and creative industries, and therefore a draw for national and international talent.

Cheaper fringe offices have historically helped generate economic growth and jobs, providing space for entrepreneurs and creatives in the early stages of their businesses. However, the first rung on the property ladder for many start-ups has now been removed as costs have escalated in most key global cities over the years. The Covid-19 pandemic has also normalised home-working in many locations, meaning that start-ups, creatives and entrepreneurs need incentives to return to cities.

This is not just an issue for the businesses looking for affordable space: cities across the world  benefit from the activity and vibrancy that start-ups, the arts and social enterprise tenants have brought into areas that were once dilapidated and un-loved. However, these are often the first to be pushed out by increasing rents, as developers, investors and higher-paying occupiers become attracted by the very vibrancy that these tenants have helped to build. 

Cities that have succeeded in attracting and maintaining creative talent often have lower office costs. Berlin for example has thrived due to its cheap rents (despite fast rent increases, Berlin remains on average 30% lower than London or New York), creative atmosphere, and support system for local artists. The creative sector now accounts for 10% of Berlin’s economy, having created about 67,000 jobs since 2009.  

This article was originally published in https://www.savills.com/

The value of all the world’s real estate reached $326.5 trillion in 2020, a 5% increase on 2019 levels and a record high.  Growth was driven by residential which is by far the largest real estate sector, accounting for 79% of all global real estate value.  It saw its value increase by 8% over the year, to some $258.5 trillion.

The world’s most significant store of wealth, real estate is more valuable than all global equities and debt securities combined, and almost four times that of global GDP.  The value of all gold ever mined pales by comparison at $12.1 trillion, at just 4% the value of global property.

This article was originally published in https://www.savills.com/

Tenant enquiries were unchanged but site visits fell following the reintroduction of COVID-19 controls, particularly in Australia, Southeast Asia, and Japan.

Flexible space demand continued on a downward trend, but requirements for traditional office space increased.  

Rents improved this month, mainly driven by mainland China, Singapore and India. The period saw stronger pressure to increase incentives, particularly in mainland China and India.

Sentiment in most markets strengthened or remained stable, with mainland China and India among the strongest performers.

This article was originally published in https://www.cbre.com/

Although multifamily has been regarded as an institutional grade asset class in the U.S. and Europe for some time, Asia Pacific’s strong culture of home ownership has resulted in a relatively small investible universe.

Japan has been the lone exception, with the country’s large, liquid, and resilient multifamily market attracting robust interest from both foreign and domestic investors over the past decade.

More recently, factors such as urbanisation, declining housing affordability and regulatory change have piqued investor interest in multifamily in several other Asia Pacific markets, most notably mainland China and Australia.

This Viewpoint explores the growth drivers behind multifamily investment in Asia Pacific; profiles the region’s established and growing multifamily markets; and explains how investors can access this increasingly attractive sector.

This article was originally published in https://www.cbre.com/

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This article was originally published in https://www.colliers.com/

The pandemic-induced housing boom continues with prices rising by 9.2% on average across 55 countries and territories in the year to June 2021. Ten of the world’s developed economies averaged price growth of 12% in the 12 months to June, double that seen in key developing markets (4.7%).  The rise in Hong Kong home prices is almost the fastest in Asia in the second quarter by about 2% from a quarter ago. On a quarterly basis, the growth exceeded Singapore, Mainland cities, and Korea. 

• The index is now rising at its fastest rate since Q1 2005

• A breakdown by developed and developing economies shows a more nuanced picture with developed markets outperforming by some margin

• 18 (33%) of markets tracked saw prices increase by 10% or more in the year to June 2021

• At 16.4%, Australia recorded its highest rate of annual price growth since 2003

• Purchase sentiment in the primary market is strong, the residential price in Hong Kong raised 2.6% YoY  

This article was originally published in https://www.knightfrank.com/

The megatrend of ageing populations challenges cities worldwide in terms of accommodation and care, and Hong Kong is no different. The lack of buildable land and even buildings that can be refurbished create concerns over limited senior living options, especially for today’s seniors.

As a result, there is a market need to provide a product that caters for this senior demographic. And with limited supply, demand, and stable income, it creates viable interest for investors, developers and operators, especially as we believe senior living assets could reach yields of up to 3.25% per annum, outperforming residential and Grade A office returns.

To discover more, access our exclusive publication ‘Senior living; Hong Kong’s new investment horizon’ to #SeeWhatCouldBe, or contact one of our experts Hannah Jeong, Stella Ho or Winter Ren.

This article was originally published in https://www.colliers.com/

On 13^th September 2021, the Ministry of Law unveiled the Rental Waiver Framework (RWF) under the COVID-19 (Temporary Measures) (Amendment No 4) Bill. The RWF is expected to commence in October 2021.

During the Phase 2 (Heightened Alert) (P2HA) periods between (1) 16 May to 13 June 2021, and (2) 22 July to 18 August 2021, some businesses were disrupted by the safe management measures imposed to curb the spread of the COVID-19 virus. Under the Rental Support Scheme (RSS) announced in May 2021, the government introduced support measures to alleviate the economic impact on both small and medium enterprises (SMEs), as well as eligible non-profit organisations (NPOs). The support measures included two cash payouts – the first pay-out was to be disbursed starting from 6 August 2021, while the second payout will be disbursed in October 2021.

Table 1: Rental Support Scheme Payout

*Note: Gross contracted rent will include gross turnover rent, maintenance fees and service charges. In-kind assistance such as additional advertising or parking promotions cannot be offset.

In addition to the two payouts under the RSS, the RWF stipulates commercial landlords to provide two weeks of rental waiver to eligible SMEs and NPOs affected by the P2HA measures. This aims to ensure the fair co-sharing of rental obligations over the P2HA periods between the government, landlords and eligible tenants.

Table 2: Rental Waiver Framework (RWF)

Together with the one month of rental support in cash, coupled with the two weeks of rental waiver, qualifying tenants in privately owned commercial properties will receive about 1.5 months of rental support in total. This compares to about two full months across the two P2HA periods.

Landlords who have provided rental support to their tenants during P2HA may offset from their rental waiver obligations any direct monetary assistance or rental waivers provided from May 16 up to the date they receive all the tenant’s supporting documents.

CBRE Research Views
The mandatory rental waiver under the RWF is intended to establish a baseline position for the handling of tenants’ rental obligations. Ultimately, it is important for both landlords and tenants to work out mutually agreeable arrangements based on their specific circumstances, as challenges tied to COVID-19 are not a one-off but a long-term process.

The rental payouts and waivers this year can be considered to be more equitable and encompassing. Compared to the Rental Relief Framework in 2020, the latest RWF sets a directive for landlords to waive the 0.5 months of rental definitively. In addition, the payouts and waiver took into account gross turnover rent, maintenance fees and service charges, on top of the base rents.

Overall, the framework helps to ease the cashflow pressure for SMEs and NPOs, in particular those in the retail sector, which have been hit hardest during the pandemic.
 

For further information, please refer to the links below:

Rental Waiver Framework 2021 (mlaw.gov.sg)

Rental Waiver Framework for Businesses Impacted by Phase 2 (Heightened Alert) (mlaw.gov.sg)

IRAS | Government Cash Payout (2021 Rental Support Scheme)

This article was originally published in https://www.cbre.com/