Knight Frank Asia-Pacific Capital Markets Report

04 August 2016

Knight Frank, the independent global property consultancy, today launches the Asia Pacific Capital Markets Report July 2016. With concerns over the state of the global economy, investors are balancing a need for security and liquidity, while searching for the next sources of growth. Technology as a driver for real estate demand is not restricted to China (namely Shanghai, Beijing and Shenzhen). Most major regional markets are seeing growth in this sector, with a number of other tech hubs really standing out: Seoul and Bengaluru.

Asia-Pacific also saw a subtle change in direction in the first half of 2016, as Singapore and Hong Kong returned to the forefront of the region, accounting for the three largest investment transactions. 
Nicholas Holt, Asia Pacific Head of Research, says, “Two markets that have recently seen an uptick in activity are Singapore and Hong Kong, two of the major regional financial hubs. The largest three deals so far of 2016 were transacted in these two cities. In particular, a willingness for previously significant pricing gaps to be bridged in Singapore led to the largest ever single-tower transaction in Asia-Pacific, bringing optimism that more deals could come to market. Elsewhere, Tier-1 Chinese cities are seeing their investment markets deepen and mature – and could start to be seen as core markets for regional or global investors.”
Cross-border investment
Cross-border activity (excluding land sales) in Asia-Pacific markets totalled US$54.5 billion over the past 18 months since 1 January 2015, accounting for approximately one-third of the total investment volumes.
The US is the most significant cross-border investor in the region, followed closely by Singapore, Canada, Hong Kong and China. 
The major targeted markets remain Australia, Japan, China, Singapore and Hong Kong, although transactions in India, Vietnam and Malaysia demonstrate that there are opportunities in emerging Asia for those investors looking up the risk curve.
Institutional investors
Looking at institutional investors, Neil Brookes, Asia Pacific Head of Capital Markets, explains, “Post-Brexit, the current market volatility has caused policy makers to renew their efforts in monetary easing, and as a result the ‘lower for longer’ view for property yields is likely to continue for the foreseeable future. The largest buyers of London commercial assets in 2015 – Chinese and Taiwanese investors – are now starting to switch their focus to other developed markets such as Australia, Japan and the US following the Brexit vote.”