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Key findings:

  • Australia: Across almost all the Australian cities covered, cap rates in all sectors exhibited an upward movement quarter-on-quarter. Industrial assets in Australia with long lease expirations and low fixed-term rent experienced downward pressure on values during the last quarter.
  • China: In China, investment activity remains subdued with only individual investors and insurance institutes actively seeking out discounted assets and adopting a cautious approach to investment. This has resulted in subdued market sentiment in the property sector for Beijing and Shanghai compared to Q2. To vitalize the market environment, the central bank of China has been lowering the Loan Prime Rate (LPR) to alleviate the burden on loans, with the objective of unlocking resources for consumption and promoting nationwide GDP growth. In Beijing and Shanghai, the industrial sector experienced a wave of new supply as the take-up of existing stock slowed down. The government’s release of more industrial and logistics land resulted in an augmented supply in the market.
  • Hong Kong: Hong Kong interest rates have continued to gradually increase over the past year. Asset values are under increasing downward pressure, which is beginning to be reflected in pricing. Vacancies remain high and rental prices experienced downward pressure across all sectors.
  • India: In Bengaluru, Q3 office transaction volumes remained similar to the previous quarter, with a few transactions driven by individual investors as institutional players were less active. Deal sizes were smaller but more resilient, resulting in a marginal downward change in the cap rate in the office segment. In Mumbai, the retail sector is anticipated to gain traction in the near future, driven by demand from the luxury segment and the release of additional supplies of quality organized retail assets. Mumbai industrial demand remained strong in Q3, and the compression in the cap rate was attributed to lower availability of Grade A stock, coupled with a positive outlook from large institutional investors towards the sector. The investors were willing to trade off lower current yields for anticipated future growth in the sector.
  • Japan: Some investors may consider Japan a risk averse market for real estate investment since the start of the interest rate hike, primarily due to its relatively accommodative monetary policy. The sales volume of foreign investments in real estate has yet to witness a significant increase, although sentiment and interest remain strong. The Tokyo office sector performed well in Q3, with occupancy rates remaining at a healthy level, especially when considering the challenges faced by some other cities in terms of take-up. This is driven by the return to office culture – government statistics indicate that the hybrid working ratio in Tokyo was 44% in mid-2023, down from a peak of over 64% in 2021.
  • Korea: Seoul office assets remain in high demand, with rental levels holding firm for landlords. However, there is increasing downward pressure on values due to a lack of liquidity in the market.
  • New Zealand: In Auckland, there has been upward movement for more than a year in the office sector. Transactional activity remained subdued over the last quarter as investors continued to take a cautious approach to the market. The Reserve Bank of New Zealand has maintained a steady Official Cash Rate in its last three monetary policy meetings, indicating that rates are at or near their peak in the current cycle. With interest rates stabilising it is anticipated that greater clarity over asset pricing will emerge. This, in combination with the election having been completed, is likely to result in an uplift in sales activity during the final quarter of 2023 ad into 2024.
  • Singapore: Cap rates across sectors remain subdued, with a lack of sales evidence to support movement. Increasing lending costs are putting pressure on many investors and owners. However, there are other investors with deep pockets who are taking advantage of this opportunity to acquire assets for long-term investment.
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Q3 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: Year-to-date, Core CBD (Grade A) rents have increased by 1.3% in 2023. There was positive net absorption of 0.11 mil sq. ft., as compared to a more modest level of 0.03 mil sq. ft. in H1 2023.

Business Parks: Demand for business parks continued to moderate as leasing sentiment turned cautious. Rest of Island rents registered its first quarter of decline since Q1 2021.

Retail: Prime islandwide retail rents rose at a faster clip in Q3 2023 (1.4% q-o-q), compared to 0.8% q-o-q in Q2 2023.

Residential: New home sales slowed despite a larger number of new projects and units launched. Following the fall in overall private housing prices in Q2 2023, prices rebounded.

Industrial: Despite the economic headwinds, prime logistics rents have grown by 11.7% year-to-date, as limited supply of prime logistics space was met with strong leasing demand.

Investment: Preliminary real estate investment volumes in Singapore for Q3 2023 surged 93.4% q-o-q (-13.5% y-o-y) to $7.044 bn, mainly on public (mostly residential) land sales. Excluding these sites, investment volumes would be down marginally by 2.5% q-o-q.

This report was originally published in https://www.cbre.com.sg/insights/figures/singapore-figures-q3-2023

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Investors have long-sought after real estate for price appreciation, inflation protection and diversification.

There are a variety of ways to access real estate, including the private route, direct investment in brick-and-mortar properties, debt investments backed by real estate, publicly traded Real Estate Investment Trusts (REITs) and securities, and securitised fixed income instruments. Arguably the most optimal approach is to combine these approaches’ complementary benefits by following what CBRE terms as the ‘Four Quadrants’ approach.

The Four Quadrants approach involves four primary investment conduits through which institutional investors can obtain exposure to commercial real estate. These are:

  • Private Equity
  • Public Equity
  • Private Debt
  • Public Debt

This report reviews the Asia Pacific real estate investment landscape across these four quadrants, and shares insights on potential opportunities and strategies for investors.

This report was originally published in https://www.cbre.com/insights/reports/asia-pacific-four-quadrants

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In Colliers' latest report Global Capital Markets: Insights and Outlook - Global Capital Flows, Singapore tops the list of biggest global spenders so far in 2023 followed by the US. The Lion City, with cross border capital investments worth USD 21, 840 million in H12023, now represents around a quarter of the total investments and is three times bigger as a spender this year versus Canada in the third position.

Hong Kong and Japan stood out as the fourth and fifth largest source of cross-border capital, spending USD 6,508 million and USD 5,151 million respectively in the first half of this year.

The region came out equally strong as an investment destination. Japan, China, Australia and Singapore are among the top 10 investment destinations globally with healthy investment growth seen across each of these markets.

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Office: Office leasing volume slightly improved on a q-o-q basis but most deals involved renewals, relocations, and consolidations. All markets tracked by CBRE (except Seoul) saw vacancy increase over the quarter. Rents were flat despite solid growth in Sydney, Perth, Seoul and selected micro-markets in major cities of India.

Retail: Retail leasing activity continued to recover as retailers stayed cautiously optimistic. Site inspections by retailers rose to their highest levels in June since surveys began, thanks to resilient upgrading demand and requirements from new market entrants. Occupancy in core retail districts gradually recovered over the period, pushing up rents by 0.2% q-o-q.

Logistics: Subdued regional export demand, slowing manufacturing activity and weak e-commerce growth strained logistics leasing demand. New supply remained elevated while rents increased by 1.1% q-o-q, marking a second consecutive quarter of weaker growth.

Investment: With interest rates yet to reach their peak and property yield expansion insufficient to reflect the rising cost of finance, investment volume contracted by 37% y-o-y to US$19.2 billion. Cross-border investment volume totalled just US$4.1 billion. Negative carry continued to make investors hesitant to invest in Asia Pacific commercial real estate.

This report was originally published in https://www.cbre.com/insights/figures/asia-pacific-figure

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APREA strives to be the leading advocate for the real assets sector in Asia Pacific.

Asia Pacific Real Assets Association Limited
18 Robinson Road
#15-01, Singapore 048547

Tel: +65 6955 7850
Email: enquiries@aprea.asia

APREA Japan
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Japan

Membership, Publicity and Media Contact

Sigrid Zialcita
Chief Executive Officer
Email: sigrid.zialcita@aprea.asia

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