Hong Kong, August 16, 2016 –In Q2 2016,
overall commercial real estate investment
turnover picked up from the previous quarter, rising 19% q-o-q to
US$23.1 billion. Based on CBRE Research’s preliminary Q2 2016 MarketView figures, the increase was mainly driven by the
closure of several large transactions, including the largest office transaction
in Asia Pacific since 2001—the US$2.5 billion acquisition of Asia Square Tower
1 in Singapore by the Qatar Investment Authority.
Across the region, strong
investment activity was recorded in Australia and China. China saw investment
volume jump by 39% q-o-q as domestic investors continued to enjoy cheap funding. Offshore capital
remained active in Australia with purchasing by foreign investors increasing 35% q-o-q to US$2 billion.
“The completion of several large
transactions this quarter, in Singapore and Tokyo in particular, underlines the
continued strong demand for prime core assets around the world, especially in
the office sector, by institutional investors,”
said Dr Henry Chin, Head of Research,
CBRE Asia Pacific.
international institutional investors displayed robust activity in cross-border
investment in Q2 2016. Foreign capital from Asia, particularly China and
Singapore, remained active in Australia. Although in China, investment activity
was more dominated by domestic investors—accounting for over 90% of total
turnover—as international investors turned more cautious due to further
depreciation of the RMB. Similarly in Japan, coupled with a lack of investible
stock, international investors turned more risk averse due to the weaker-than-expected
economy and stronger yen. Negative government bond yields have prompted
domestic institutional investors, especially REITs, to turn more active in
evaluating real estate investment opportunities,” said Dr Chin.
Excluding the quarter’s noteworthy
transactions, CBRE Q2 2016 figures reveal that overall investment turnover was stable
across the Asia Pacific region.
region’s office market—despite corporate sentiment steadying as the Chinese
economy stabilizes—leasing demand remained subdued, with net absorption rising
just 5% q-o-q, bringing the H1 2016 total to 20 million sq. ft.
NFA, a decline of 17% y-o-y.
dominated office leasing activity in Q2 2016 as occupiers in weak markets, such
as Hanoi, Ho Chi Minh City, Perth, Singapore and Seoul, took advantage of
cheaper rents by relocating to better locations or better office space in
decentralized areas. Cost savings remain as the key driver for relocation
and consolidation, particularly among multinationals,” said Dr Chin.
In the retail
environment, consumer sentiment remained under pressure in Q2 and is expected
to weaken further amid uncertainty in the global economy, volatility in the
financial markets, and the weak employment outlook.
improvement in leasing sentiment in China, retailers showed caution towards new
openings and continued to consolidate store networks. In Hong Kong, some
international retailers are leveraging on lower rents to relocate for
cost-savings or to better locations. A change in tourist consumption patterns
also continue to affect Taipei and
Tokyo due to a fall in spending by Mainland Chinese visitors,” said Dr Chin.
“On the other
hand, there are some markets which show positive retail performances such as in
India. The newly relaxed FDI policy helped boost retailer confidence this
quarter. The sector is expected to see increased activity due to the entry of
new single brand retailers and the expansion plans of existing players, mainly
in the F&B sector. In Vietnam, CBDs are also showing stable activity thanks
to interest from overseas retailers,” he added.
In the industrial
and logistics sector, leasing demand for warehousing space was mixed as the
regional trade and manufacturing slowdown fed through into the warehousing
"Q2 2016 saw
the logistics sector continue to be driven by 3PLs and e-commerce firms on the
back of online retail growth; demand remained resilient in China, India and
Korea. In Japan, even though vacancy continued to rise, net absorption stood at
a record high, implying stable demand in this market,” said Dr Chin.
Other key highlights:
Office rents edged up 0.5% q-o-q led by strong growth in the Sydney CBD and Shanghai amid tight
availability and steady demand.
Office rental growth is
expected to slow over the remainder of 2016 as demand weakens and new supply comes on stream.
The large volume of new supply in China and India in H2 2016 will push up
Retail rental growth rebounded
to positive territory in Q2 2016, due mainly to a softer correction in Hong Kong,
the recovery in China, and strong growth in the Sydney and Auckland CBDs.
Retail rents are forecast to
record slight growth this year, due to the improved outlook in China and
spillover demand in the Sydney and Melbourne CBDs.
Overall logistics rents
increased by 0.2% q-o-q, supported by strong growth in China. While
exports remain under pressure, domestic consumption is robust, supporting
Weaker economic growth and the strong supply pipeline will
continue to dampen regional rental growth in the short term. Logistics rents are forecasted to be flat
for H2 2016, after edging up 0.6%
All data is preliminary and subject to change.
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.