Knowledge Hub

Just 160,000 square metres (sq. m.) of new and major refurbished supply is expected across Australia’s eastern seaboard markets of Sydney, Melbourne and Brisbane in 2018, representing less than 1.5% of existing stock. Of this space, the majority will be in Melbourne and has already been pre-committed. With business confidence in positive territory, we anticipate the uptake of stock to continue, despite limited availability in both Sydney and Melbourne. As a result, we expect vacancy to compress in all three markets, with Sydney forecast to be the tightest at approximately 3% by the end of 2018, the lowest level in over 25 years.

Occupier demand in the CBD reached the highest in 11 quarters in 4Q17, bring ing the full year CBD net absorption to the highest in three years.

Residential market remained optimistic in 4Q17. Transaction volume pf strata units in the prime districts eased slightly 1-o-1 due to the year-end holiday period. 

Retail sales excluding motor vehicles recorded over two consecutive quarters of growth, likely a result of the seasonal timed sales.

Amid stable stock and as tenants physically moved into their new premises, the business park vacancy rate eased for the sixth consecutive quarter in 4Q17.

The “Project of the Century” will provide enormous opportunities in the built environment over the coming decades

Over the last two generations, we have seen a familiar trend of rising wealth and influence in Asia. It started with the Japanese in the 70s and was followed by the Koreans in 90s and the South East Asian “Tigers” in the early 2000s. For the past decade, China and India have been among the powerhouses of world economic growth. Given their ambitions and scale, they are both likely to be important contributors for a very long time.

The Belt and Road Initiative (BRI) is one of clearest manifestations of China’s vision and influence. The infrastructure and investment underpinning the BRI will streamline trade flows and lift economic activity in much of Asia, the Middle East, and North and Eastern Africa. While the vision will bring huge opportunities for investors and developers, the BRI will also change the face of corporate China, which will have an enormous influence in the 21st century as Chinese brands become household names around the world.

This report aims to bring some clarity to the initiative, with Knight Frank’s research teams developing a Belt and Road Index to rank 67 countries according to a number of key criteria, along with local analysis from a significant number of BRI markets. Our analysis shows that opportunities are widespread, with improving bilateral relations between BRI countries and China providing potential for real estate investment, development and business expansion. No doubt the BRI will provide further impetus to corporate China’s growth and influence in global markets.

With this report, we are taking crucial steps in being able to provide the highest level of advice around tangible opportunities along the BRI. We hope you find the report useful and insightful.

Take a look through the sixth edition of The Occupier Edge, authored by Cushman & Wakefield’s very own future thinking experts. In this everchanging environment, you must stay on your toes – that’s exactly what we are doing. At Cushman & Wakefield, we put our clients and our people at the center of what’s next.

In addition to blockchain and co-working, this edition of The Occupier Edge also touches upon how PropTech is disrupting the real estate industry, the multi-faceted approach of placemaking, and why GenZ is the future. We also feature how robotics are being used to improve user experience and efficiency of facilities.

These are challenging times to be operating a real estate portfolio. Interest rates are starting to rise. Fundraising is intensely competitive. Property valuations have been increasing. Return expectations are falling. However, the findings of the 2018 Preqin Global Real Estate Report help to contextualize these issues within the broader climate, a climate where the asset class has flourished since the Global Financial Crisis (GFC) and delivered for the vast majority of investors that have sought greater diversification of returns within alternative assets.

2017 had been a whirlwind year as milestones kept coming in the commercial real estate (CRE) industry.

The Asia Pacific economy performed better than we expected, mostly thanks to improved global demand driving stellar export and manufacturing performance. We have had a variety of mini-shocks, some geo-political largely arising from tensions in the Korean peninsula while others being domestic such as the introduction of the Goods and Services Tax (GST) in India that caused sentiments to fall temporarily in the region’s third largest economy. Nonetheless, our property markets have shrugged off these noises. Occupier demand accelerated in many markets, with office absorption levels across the region posting their highest levels in 2017. Investment volumes also set a new watermark last year, with activity on a sector basis peaking across all asset classes with the exception of retail, where volume is on par with 2013. Further, blockbuster transactions refused to dry up especially in Hong Kong, which saw the largest ever land and office transactions recorded globally. In Japan, the most notable transaction occurred in Yokohama, just outside of Tokyo, indicating that investors are creatively looking outwards to search for opportunities.

In 2018, the region will continue to benefit from the global recovery in terms of increased demand and agenda of reforms. Against this strong backdrop, central banks will begin normalizing monetary policy, with the Bank of Korea already lifting interest rates for the first time since 2011. However, the low inflation environment means a gradual approach. We expect that same strength to hold in the property markets, with office occupancy and rent growth anticipated to remain at healthy levels even as new supply peaks in 2018. Investment activity should be no different, with transaction volumes expected to edge higher in 2018. We explain below our reasons for optimism.