Bookmark & Share
Portfolio deals worth US$13 billion (S$18 billion) underpinned investment activities within Asia Pacific, where transaction volumes showed a slight change in the third quarter of 2016, revealed a recent report by Real Capital Analytics (RCA).
Data from the RCA show that completed sales of properties in the region, excluding development sites, totalled to US$30.4 billion, a marginal decline of 1.1 percent year-on-year as investor caution and mismatch in pricing expectations remain.
The region saw fewer active buyers and deals completed in the three-month period, with portfolio deals accounting for 43 percent of the total investment volume. For the first nine months of the year, investments declined by 18 percent year-on-year to US$84.3 billion (S$117 billion).
“High asset prices as well as economic, financial and political concerns, that caused a slowdown in activity in the first half of the year, continued to impact investment decisions in the Asia Pacific region,” said Petra Blazkova, RCA’s senior director of analytics for Asia Pacific.
Meanwhile, offices were the best performing sector in Q3 2016, as it emerged as the most active sector in eight of the region’s leading cities Hong Kong, Tokyo, Seoul, Singapore, Shanghai, Sydney, Melbourne and Beijing.
Singapore, for instance, saw overall volumes increase by 54 percent year-on-year in Q3 2016 on the back of large albeit limited acquisitions primarily within the office sector, such as the sale of a stake in Capital Square by Keppel Land to ARA Asset Management.
China, however, bucked the trend as it outperformed all other markets in the region during Q3 2016, overtaking Australia as the second most active market by transaction volume.
Meanwhile, cross-border transactions within the region accounted for one-third or US$11.5 billion (S$16 billion) of the total transactions in Q3 2016. However, RCA said, this was mainly due to “domestic investors pulling back rather than a strong expansion of capital deployment across borders.”
The report noted that investments by foreign investors into the region fell for the third consecutive year, at less than US$10 billion (S$14 billion) now compared to the peak of US$38 billion (S$53 billion) in 2007. Asian investors have been stepping in to fill the gap.
Historically amongst Asian investors, Singapore capital has been the most nimble and aggressive in investing across the Asia Pacific region. But while it remains an important source of capital, Hong Kong and Chinese investors have become the most dominant foreign source of capital in the region over the last nine months, the report noted.
In fact, Chinese investors have acquired US$3.9 billion (S$5.4 billion) worth of assets in Hong Kong as well as made US$1.5 billion (S$2 billion) worth of investments in Australian property.
“Uncertainty about economic growth, deflationary pressures and prospects for interest rates, combined with geopolitical risks, are weighing on investor sentiment,” said RCA’s Blazkova.
“While the low interest rate environment militates for real estate investment, few investors are prepared to pay asking prices for a dwindling number of assets available in the market as owners adopt a buy-and-hold strategy. Nonetheless, the region continues to present good opportunities and we can expect creative approaches especially from foreign investors that wish to invest in the Asia Pacific region.”
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
Related Articles:
OUE C-REIT DPU jumps 29.4% in Q3
GLP clears air on takeover talks
Ascendas-Singbridge completes first fibre ready installation at Ascent