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Real estate transaction volumes in the Asia Pacific region reached US$33.1 billion (S$46 billion) in the third quarter of 2016, with China emerging as the region’s outperformer, revealed JLL’s latest Global Capital Flows data.
Transaction volumes amounted to US$86.6 billion (S$120.5 billion) for the first nine months of 2016, a slight change compared with the same period last year.
According to JLL, China accounted for the third-quarter transaction volumes at US$9.8 billion (S$13.6 billion), up 45 percent from that recorded in the same period in 2015.
Notably, deal volumes in China were supported by several nationwide asset sales by local firms. JLL noted that domestic buyers were active in Tier I cities and aggressive on asset pricings.
Moreover, investors continued to be attracted to successful retail projects, despite competition from online retailers. Chongbang Group, for instance, paid more than US$500 million (S$696 million) to buy back an 80 percent stake in the Jinqiao Life Hub project in Shanghai.
Chinese corporates also dominated transactions in Hong Kong. According to JLL, en bloc office properties there continued to be favoured by investors as Chinese demand supported rents. Hong Kong witnessed robust quarter-on-quarter volume growth with deal volumes jumping 56 percent in Q3 2016 from the previous quarter.
In Singapore, transaction volumes soared 61 percent year-on-year in Q3 2016, on the back of a string of commercial property transactions.
“We are seeing increasing investor confidence in the medium-term office market outlook, buoyed by healthy take-up in new supply,” said Greg Hyland, JLL head of capital markets for Singapore.
Deal volumes in South Korea, on the other hand, increased 49 percent year-on-year in the first nine months of 2016.
“Some Korean corporates tried to improve their financial positions by selling non-core buildings with leasebacks,” stated Steven Craig, JLL managing director for Korea. “At the same time, core funds with plentiful liquidity were searching for yields, outweighing anxiety from weak occupier market outlook.”
In Q3 2016, deal volumes in Japan reached US$8.7 billion, or 26 percent of Asia Pacific’s total volumes, due in part to a strong yen, which rose 19 percent from last year.
Deal volumes for the first nine months of 2016, however, dropped 18 percent year-on-year in yen terms but on US dollar terms, transaction volumes were down by just nine percent.
Similarly, Australia’s volumes for the first nine months of 2016 fell nine percent year-on-year as owners held on to stock considering limited reinvestment opportunities.
“However, interest from both domestic and international investors remained strong, as relatively high spreads and the prospect of above-trend office rental growth attracted buyers. Commercial properties continued to be highly sought after, as evidenced from unprecedented levels of bids for assets in Sydney and Melbourne,” said JLL.
Looking ahead, JLL expects Asia Pacific’s markets to remain resilient, with real estate assets remaining to be attractive compared to other asset classes.
“We see continued institutional appetite for real estate in the region but finding value is challenging. From a business perspective, we expect steady deal flows in the next 12 months but ongoing stock shortage,” said Stuart Crow, JLL head of Asia Pacific Capital Markets.
“As a result, investors will increasingly look for value in off-market deals, newer or secondary cities as well as newer sectors.”
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.