Market Outlook

Momentum in the Japanese economy slowed with a negative 2.5% growth in the third quarter of 2018. This is largely related to the drop in exports and consumer spending due to the occurrence of natural disasters. Airport closure also caused a decrease in exports and the number of inbound tourist spending, which makes up part of total exports.

The Singapore economy grew at a slower 2.2% YoY in 3Q2018. The finance & insurance sector grew at a stronger 5.6% YoY, while the information & communications sector expanded by 4.7% YoY, leading to office-using employment increasing by 7,500 workers.

After nine years of relentless expansion, Asia’s real estate markets are facing rising headwinds.

An impending trade war, rising interest rates, tighter access to credit, and buyer fatigue at sky-high prices for both commercial and residential properties are causing investors to question whether the long bull cycle may be reaching its peak: “The market’s wobbling like a jelly on a plate,” as one investor put it. “We’re at historic highs across the board.”

That said, market fundamentals in 2018 remain robust.

After nine years of relentless expansion, Asia’s real estate markets are facing rising headwinds.

An impending trade war, rising interest rates, tighter access to credit, and buyer fatigue at sky-high prices for both commercial and residential properties are causing investors to question whether the long bull cycle may be reaching its peak: “The market’s wobbling like a jelly on a plate,” as one investor put it. “We’re at historic highs across the board.”

That said, market fundamentals in 2018 remain robust. Transactions for the year are at record levels and pricing is strong, sustained by ever-growing volumes of institutional capital piling up in Asia’s biggest economies.

For now, then, the music continues, and although some investors are looking to sell down their holdings and reposition, the sheer weight of capital looking to find a home in real estate means that prices may not fall significantly even if other indicators turn south.

Investors must consider more varied strategies than in the past to get money into the market.

What’s next for Brisbane CBD?

Tenant demand remains healthy. Click on the Download button for more information on the:

• Economic indicators
• A-grade fringe net face rents market outlook
• Brisbane fringe supply pipeline
• Key leasing transactions H2 2018

Low net supply has enabled a market recovery better than we expected over recent years. We no longer find much room left for occupancy gains; in our view, the current demand to supply dynamics remain tight enough to justify modest rental growth over several more quarters.

Low net supply has enabled a market recovery better than we expected over recent years. We no longer find much room left for occupancy gains; in our view, the current demand to supply dynamics remain tight enough to justify modest rental growth over several more quarters.

Since 2013, net absorption averaging 2.0% per annum has tracked above net new supply averaging 0.8%, reducing the vacancy to cyclical lows. We highlight the current market status has some room for upward price movements as the vacancy rate hits cyclical lows. Past weak price recovery since 2012 should also help extend the ongoing slow yet stable market recovery.

What’s next for Brisbane CBD?

Larger tenants hunting for space. Click on the Download button for more information on the:

• Economic indicators
• Prime Gross Effective Rent 
• New Development and Major Refurb
• Key leasing transactions Q1 2019

The GPR/APREA AsiaPac Performance Snapshot tracks the dynamics of listed real estate securities (including REITs) across 12 AsiaPac countries/regions and eight sectors, over multiple time horizons

• AsiaPac government bonds were least impacted by the October market correction (-1.3% total return), followed by REITs (-3.6%).
• REITs were the strongest performing asset class over a one year, 5-year and 10-year horizon.

In August, the Property Council of Australia (PCA) released data showing that the Melbourne CBD vacancy rate was just 3.6% as at 1 July 2018. This represents the lowest vacancy rate since July 2008. The rate also beat the expectations of survey respondents from a year ago‡ , where a vacancy rate of 6% was expected for Q3 2018.

This article will cover:

OPPORTUNISTIC REAL ESTATE: HIGH RISK, HIGH RETURN

With appetite for higher-risk strategies increasing in the search for high returns, opportunistic private real estate funds are of growing interest to investors. We take a look at the risk/return profile associated with the strategy. Access the article to find out more on page 2.

REAL ESTATE INVESTOR UPDATE…

This article will cover:

OPPORTUNISTIC REAL ESTATE: HIGH RISK, HIGH RETURN

With appetite for higher-risk strategies increasing in the search for high returns, opportunistic private real estate funds are of growing interest to investors. We take a look at the risk/return profile associated with the strategy

REAL ESTATE INVESTOR UPDATE

This excerpt from the newly released Preqin Investor Update: Alternative Assets, H2 2018 details investors’ real estate investment plans for the year ahead, including their next planned commitment as well as the regions and strategies presenting the best opportunities. Access the article to find out more on page 4.

The GPR/APREA AsiaPac Performance Snapshot tracks the dynamics of listed real estate securities (including REITs) across 12 AsiaPac countries/regions and eight sectors, over multiple time horizons.

• The AsiaPac equities asset class was the top total return performer in September 2018 and on a three-year basis.
• REITs were the strongest performing asset class over a one year, 5-year and 10-year horizon.