Asia Pacific Investment Trends Turnover rises in solid start to the year Sentiment remains positive Cross-border investment rebounds Fund raising activity slows Transaction activity expected to remain stable Average deal size set to decline
Table of Contents 3 Overview 4 China 5 Hong Kong 6 Taiwan 7 Japan 8 South Korea 9 The Philippines 11 Thailand 12 Indonesia 13 Singapore 14 India 15 Australia 16 New Zealand 17 Contacts 1 Vietnam CBRE Research 217 CBRE, Inc. 2
25 26 27 28 29 21 211 212 213 214 215 216 217 US$ billion US$ billion Overview Total Commercial Real Estate Investment Turnover in Asia Pacific 4 12 35 3 25 1 8 2 6 15 1 5 4 2 Asia Pacific Rolling 4 quarters total (RHS) Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 3
US$ billion China Companies During the quarter, Beijing banned the sale of hotels and serviced apartments as residential property, following a similar move set by Shanghai. Funds Tighter fund raising and higher financing costs are encouraging developers to turn to alternative financing channels including asset securitisation. More developers intend to realise their investment portfolios through establishing quasi-reits. COMMERCIAL REAL ESTATE TURNOVER Shanghai Beijing Beijing 3 25 2 15 1 5 213 214 215 216 Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 4
US$ billion Hong Kong Companies Funds The low cost of financing is supporting demand from occupiers in the CBD to buy their office units rather than lease. The winner of the Murray Road Carpark site tender will be announced in May and is set to mark a new benchmark for Grade A office prices in Central. COMMERCIAL REAL ESTATE TURNOVER Kwun Tong Causeway Bay Tsuen Wan 16 14 12 1 8 6 4 2 213 214 215 216 Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 5
US$ billion Taiwan Institutions Weak investment demand has prompted more vendors to display greater flexibility in recent months. Some are reportedly willing to lower asking prices by 1-15%. Corporations Some investors are considering to purchase hotel properties to take advantage of the downturn in the tourism market. COMMERCIAL REAL ESTATE TURNOVER Taipei City 4 3 Taipei City 2 1 Hsinchu 213 214 215 216 217 Q1 Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 6
US$ billion Japan Funds The period continued to see solid investor interest in Yokohama amid the steady inflow of tenants from Tokyo, solid rental growth and the availability of quality office assets. REITs Interest in the hotel sector is fading amid a decline in tourist spending and more competition from the likes of Airbnb. COMMERCIAL REAL ESTATE TURNOVER Yokohama Yokohama Urayasu 4 35 3 25 2 15 1 5 213 214 215 216 217 Q1 Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 7
US$ billion South Korea Corporations Private Examples of value added strategies adopted by foreign investors include filling office buildings with tenants by offering aggressive incentives and then disposing of the property. Rising tensions with North Korea and China and the ongoing domestic political corruption scandal have not negatively impacted investor sentiment. COMMERCIAL REAL ESTATE TURNOVER Seoul 1 8 6 Seoul 4 Seoul 2 213 214 215 216 217 Q1 Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 8
The Philippines Companies Corporations The hospitality sector is set to receive a boost from the government s plan to convert several airports into international points of entry. There is strong demand for dormitories and blocks of small residential units catering to BPO sector workers. SM Group recently acquired a small developer operating in this sector. CBRE Research 217 CBRE, Inc. 9
Vietnam Funds Companies South Korean buyers are seeking 3* and 4* hotels in Ho Chi Minh City, while the tourist resorts of Da Nang and Hoi An have also seen solid demand for hospitality assets. The middle-end condominium market in Ho Chi Minh City is attracting strong interest amid rising prices and limited new supply. CBRE Research 217 CBRE, Inc. 1
Thailand Companies During the quarter a number of publically listed property funds failed to convert to REITs due to a lack of votes from unit holders. Among landowners there is a trend for them to lease out land for the development of rental income properties. Corporations Bangkok CBRE Research 217 CBRE, Inc. 11
Indonesia REITs Companies The hospitality sector in Jakarta is saturated and many hotels are up for sale. Investor interest is spreading to emerging tourist destinations. In an attempt to attract foreign investment, the government has invited other Southeast Asian nations to invest in property and infrastructure such as railways, port expansion and roads in and around Jakarta. CBRE Research 217 CBRE, Inc. 12
US$ billion Singapore Funds Institutions The price gap in the office and industrial sectors continues to diminish but still exists in the retail and hospitality sectors. Sentiment around the residential sector improved this quarter with developers receiving a good response to new launches and the secondary market also upbeat. COMMERCIAL REAL ESTATE TURNOVER CBD Core Orchard 1 8 6 4 2 CBD Core 213 214 215 216 217 Q1 Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 13
US$ billion India Others Funds The new budget contains numerous incentives for the real estate, construction and infrastructure sectors in an attempt to spur investment. The next couple of years are expected to see growing interest from private equity players. Companies Investor interest in development equity is rising in the residential and commercial segments. COMMERCIAL REAL ESTATE TURNOVER Mumbai Nationwide Noida 3.5 3. 2.5 2. 1.5 1..5. 213 214 215 216 217 Q1 Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 14
US$ billion Australia Institutions Companies Funds Banks are limiting lending for real estate with LTV ratios tightening from 6-65% to 55-6%. This is creating opportunities for non-bank lenders to fill in the funding gap. Investor interest in Perth has increased as investors seek counter cyclical opportunities to buy near the bottom of the cycle. COMMERCIAL REAL ESTATE TURNOVER Canberra Melbourne Melbourne 3 25 2 15 1 5 213 214 215 216 217 Q1 Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 15
US$ billion New Zealand Institutions Others Investor demand in Wellington is growing as the occupier market tightens due to post-earthquake demolitions and relocations from damaged buildings. However, there are still seismic concerns around this market. Demand for finance continues to exceed availability as banks are rationing capital. Alternative financing sources are limited. COMMERCIAL REAL ESTATE TURNOVER Auckland 4 3 Christchurch 2 1 Auckland 213 214 215 216 217 Q1 Source: CBRE Research,. Transactions include deals above US$1 million in the,, Mixed,, Hotel and Other commercial sectors. CBRE Research 217 CBRE, Inc. 16
Research Contacts APAC Research Henry Chin, Ph.D. Robert Fong, CFA Jonathan Hills Leo Chung, CFA Roy Cheng Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
Capital Markets Contacts APAC Capital Markets Tom Moffat Bruce Baker Local Capital Markets Alan Li Jeremy Lake Andrew Stringer Andrew Lin Xuan Quynh Nguyen Thomas Gnieser James Pitchon Don Lim Henry Cabrera Rami Kaushal Kazim Ali Bokhari Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.