* Commercial, logistics, data centre assets continue to attract investor interest
* Activity returns to Australia’s cities with Sydney and Melbourne recording USD200 million-plus deals
* Korea office sector transaction sets new record
* Investment sales surge to over USD2.9 billion in Singapore
* China’s key cities benefit from proactive government policies, foreign investor participation
Hong Kong, 22 October 2020 – Colliers International (NASDAQ: CIGI; TSX: CIGI), a global leader in commercial real estate services and investment management firm, today released its Asia Pacific Market Snapshot Q3 2020 report, which points to a sustained recovery in Asia Pacific property markets as accommodative policies, attractive buying opportunities and the rise of the digital economy contribute to robust investor appetite.
Markets such as Singapore, Taiwan and China saw a resurgence in transactions over the quarter, with the commercial and logistics sectors remaining key areas of focus according to the report, which examines the previous quarter’s property market performance in 19 Asia Pacific markets and provides forecasts for the current and upcoming quarters.
“The third quarter provided further evidence that investors remain confident in the ability of regional property markets to deliver value over the long term,” Terence Tang, Managing Director of Capital Markets & Investment Services, Asia at Colliers International, said. “Major office transactions closed in key centres such as Seoul and Singapore, and data centres are attracting strong interest in markets like Japan and Hong Kong as the shift to cloud and e-commerce services picks up pace. With government policies likely to remain supportive, more value-buying opportunities are likely to emerge, and we expect demand to remain robust in the final quarter of the year.”
John Marasco, Managing Director, Capital Markets & Investment Services, Australia and New Zealand at Colliers International, noted: "Given Australia's ongoing appeal as an investment destination, we expect key markets, such as Sydney, Melbourne and Brisbane, to see a pick-up in transactions starting in the fourth quarter with a focus on core-grade assets as investors make up for lost time and take advantage of more relaxed interstate border restrictions. In New Zealand, we see domestic players filling the opportunity gap until restrictions are lifted and international investors flood back in."
Australia’s cities demonstrate resilience
Continued transactions in Australia’s major cities showed a lull in activity, brought on by COVID-19-related restrictions, is likely to prove temporary. Melbourne’s CBD Western Core saw the purchase of a Grade-A office asset for AUD454 million (USD323 million) by DEKA, while a business park in Sydney changed hands in an off-market transaction for AUD306 million (USD218 million). Resurgent demand from a diverse range of institutional investors, including REITs and major superannuation funds, is expected to fuel more transactions in Q4 and early next year.
Domestic investors seize the opportunity in Singapore
Investment sales in Singapore in the third quarter jumped 78.0% Q-o-Q to SGD3.99 billion (USD2.92 billion) as COVID-19-related restrictions continued to ease and local investors moved to purchase quality assets at below-market cap rates. Activity was consistent across the residential, industrial and commercial sectors. The office segment is expected to see significant growth in the coming months as more of the region’s rising technology players aim to boost their presence in the city-state.
Accommodative policies stoke investor appetite in Korea
Low interest rates and the government’s expansion of accommodative fiscal policies helped fuel continued activity in the Seoul office market. Transaction volumes for the quarter hit KRW4.18 trillion (USD3.48 billion), led by big-ticket deals like the sale of the Hyundai Marine & Fire Insurance Building, which posted the highest unit price of any transaction in Korea at USD8,000 per sq m. With the policy environment likely to remain positive, we anticipate sustained domestic investor interest in core and core-plus assets.
Japan hotels helped by government support
Government policies to manage the effects of COVID-19 also supported the market in Japan, with the hotel segment benefitting from subsidies designed to offset a lack of foreign visitors by encouraging domestic tourism. Though landlords are coming under more pressure to offer incentives to tenants, the office sector in Tokyo is holding up well, thanks in part to persistently low vacancy rates. The logistics sector, particularly data centres, will continue to attract overseas investors given the shortage of new stock.
Interest in China industrial, commercial property to stay high
Robust investor demand and forward-looking government development initiatives were in evidence across China’s major cities. In Shanghai, offshore investor-led transactions jumped 20% Q-o-Q and investors are likely to remain active in the fourth quarter as efforts to groom high-end technology parks and manufacturing zones gain pace. Beijing’s Grade A office market witnessed a rebound with mixed-use developments the standout category in terms of transaction volumes. Office and business park properties are expected to remain in favour with investors given their stable income potential.
Investors hunt for bargains in Hong Kong
A relative slow down for Hong Kong’s property market has prompted a softening of prices that is being viewed as a buying opportunity by mainland Chinese investors. Nearly half of the 13 government sites sold over the last year were snatched up by developers from mainland China, as they look to expand in what will remain one of the world’s most sought-after property markets. The outlook is particularly positive for the industrial sector, which is witnessing growing demand for data centres from mainland Chinese companies. During the quarter, China Mobile Limited paid HKD5.6 billion (USD722 million) for a plot of land to construct a data centre.
Download the Asia Pacific Market Snapshot Q3 2020 report.
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