Capital Markets

Office: Office leasing volume slightly improved on a q-o-q basis but most deals involved renewals, relocations, and consolidations. All markets tracked by CBRE (except Seoul) saw vacancy increase over the quarter. Rents were flat despite solid growth in Sydney, Perth, Seoul and selected micro-markets in major cities of India.

Retail: Retail leasing activity continued to recover as retailers stayed cautiously optimistic. Site inspections by retailers rose to their highest levels in June since surveys began, thanks to resilient upgrading demand and requirements from new market entrants. Occupancy in core retail districts gradually recovered over the period, pushing up rents by 0.2% q-o-q.

Logistics: Subdued regional export demand, slowing manufacturing activity and weak e-commerce growth strained logistics leasing demand. New supply remained elevated while rents increased by 1.1% q-o-q, marking a second consecutive quarter of weaker growth.

Investment: With interest rates yet to reach their peak and property yield expansion insufficient to reflect the rising cost of finance, investment volume contracted by 37% y-o-y to US$19.2 billion. Cross-border investment volume totalled just US$4.1 billion. Negative carry continued to make investors hesitant to invest in Asia Pacific commercial real estate.

This report was originally published in https://www.cbre.com/insights/figures/asia-pacific-figure

The Singapore property market remains resilient despite weakening property demand. Market rents have continued to rise amidst a tight supply pipeline. However, with weaker growth prospects and a flight to quality, the market is starting to bifurcate, with non-prime assets seeing stagnating growth.

Our latest paper explores the economic outlook for Singapore, the impact on the office, industrial, retail, private residential, and hotels sector, and latest investment trends.

Download the Report

Q2 2023 Singapore Figures report provides the latest commentary and data on net absorption, rents, vacancy, supply and other key metrics in Singapore’s office, business parks, retail, residential and industrial markets, along with an analysis of real estate investment activity.

Executive Summary

Office: With a low prevailing vacancy level, gross effective rents for the Core CBD (Grade A) market increased marginally by 0.4% q-o-q.

Business Parks: Leasing activity was focused on renewals as occupiers exercised more caution due to rising global macro economic headwinds. Selected tech and R&D industries gave up space in Q2 2023.

Retail: Prime retail rents for all submarkets rose further in Q2 2023, supported by the continued recovery of the Orchard Road, City Hall/Marina Centre and Fringe areas, and the resilience of the suburban market.

Residential: Private home prices declined for the first time in three years after cooling measures.

Industrial: Prime logistics rentals have grown by 8.6% in H1 2023, despite a weak macroeconomic backdrop mainly due to limited supply.

Investment: Preliminary real estate investment volumes in Singapore for Q2 2023 declined 44.1% q-o-q and 64.3% y-o-y to $3.495 bn, mainly on sharp falls in retail and office asset sales.

This report was originally published in https://www.cbre.com.sg/insights/figures/singapore-figures-q2-2023

FY23 saw PE activity in real estate stable on a y-o-y basis. However, there was a keen interest in platform deals, with a total value of $4.5 Bn. Most of the large ticket platform deals were in rent-generating assets (offices & warehouses) for pan India developments, while the smaller ticket items were largely for residential developments in southern cities of India. Domestic investors were significantly more active in FY23, while foreign investors have seen their incremental investments decline. Consequently, the share of domestic PE investors in Indian RE increased from 14% in FY22 to 22% in FY23.

The office sector remains a key focus for Asia Pacific investors optimistic about the long-term fundamentals.

• Within APAC, Melbourne and Tokyo stand out on the path to value stability and recovery along with Copenhagen, Toronto and San Francisco at the global level. 
• While core offices remain a top pick for investors in APAC and EMEA, substantiated by current office investment volumes, there is a very different narrative in North America.
• Office occupancy levels in APAC are averaging 80%, and office density remains high. In Europe, occupancy is back to 65% and in North America, rates are at 50%.
• Seoul and Singapore recorded net absorption 30% above historical averages with both markets recording falling vacancy rates over 2022, contrary to most major markets globally. 
• Although limited sales transactions occurred over Q1 2023, we anticipate market sentiment will recover as an expected peak of the interest rate cycle comes to fruition over H2 2023 and equips investors and vendors with clarity and confidence regarding asset values and the cost of borrowing across the region.

Download the Report

Key Trends

• Investment sentiment remains subdued
• High interest rates continue to weigh on investor demand
• Office (-40% q-o-q) and industrial (-52% q-o-q) investment declines sharply
• Negative carry drives some motivated sellers to increase discounts
• Cap rates set to expand further over remainder of year
• Purchasing activity to remain muted but should resume in H2 2023
• Prices to undergo further downward adjustment

This report was originally published in https://www.cbre.com/research-and-reports?PUBID=CA8D02B3-3EA7-409C-B5BA-0BD91194CD6E

This report examines the investment capital flows to and from the Asia Pacific region in 2022, and highlights the key markets and sectors that saw notable inflows and outflows.

Key highlights include:

• India was the only market in Asia Pacific to attract more international capital in 2022 compared to the previous year.
• While Singapore remains the biggest source of capital in Asia Pacific, investment halved from 2021.
• Western investment in mainland China fell to just US$500 million in 2022.
• Interest and exchange rate volatility has eroded Asia Pacific investors’ appetite for U.S. real estate.
• U.S. investment in Asia Pacific slowed significantly due to sharp interest rate hikes in H2 2022.

This report was originally published in https://www.cbre.com/insights/reports/2022-asia-pacific-real-estate-capital-flows

Q1 2023 Singapore Figures report provides the latest commentary and data on net absorption, rents, vacancy, supply and other key metrics in Singapore’s office, business parks, retail, residential and industrial markets, along with an analysis of real estate investment activity.

Executive Summary:

• Office: The strong momentum amongst the office sector began to show signs of moderation as uncertainties within the tech and banking sectors grew.
• Business Parks: Rental increase for City Fringe took a pause as rents remained flat for the first time after seven consecutive quarters of increase. Rents for Rest of Island also remained flat in Q1 2023.
• Retail: Prime retail rents for all submarkets continued to rise in Q1 2023, buoyed by the recovery of the Orchard Road, City Hall/Marina Centre and Fringe areas and the resilience of the suburban market.
• Residential: Private home price growth saw an uptick amid low transaction volumes.
• Industrial: Amid strong competition for storage space in modern ramp-up developments, prime logistics saw the strongest rental growth of 3.7% q-o-q in Q1 2023.
• Investment: Preliminary real estate investment volumes in Singapore for Q1 2023 surged by 73.0% q-o-q (but down 40.9% y-o-y) to $6.068 bn, mainly on the large-ticket retail asset divestments by Mercatus.

This report was originally published in https://www.cbre.com.sg/insights/figures/singapore-figures-q1-2023

Q4 2022 Singapore Figures report provides the latest commentary and data on net absorption, rents, vacancy, supply and other key metrics in Singapore’s office, business parks, retail, residential and industrial markets, along with an analysis of real estate investment activity.

CHINA

“The year got off to a challenging start in China with a slowing economy and continued debt crisis exacerbated by lockdowns. Liquidity crunches may force developers to accelerate disposals at discounted rates while interest rate cuts and reduced quarantine periods should make investments more attractive.” – James Macdonald, China

HONG KONG

“In Hong Kong investment sentiment has stabilised as the local epidemic situation has improved but plenty of caution remains. Investors are keen to look for value-add strategies including redevelopment and conversion.” – Simon Smith, Hong Kong

INDIA

“Private equity investment in life sciences research and development real estate in India has gained momentum since 2021 and we expect to see further growth in the segment, owing to favourable policies, a large workforce, and cost efficiencies.” – Arvind Nandan, India

INDONESIA

“Positive figures for the Indonesian economy combined with an improved pandemic situation has revived sentiment in the property market with some sectors seeing higher absorption levels. Despite this rental and price levels have remained under pressure during the first half of the year.” – Tommy Henria Bastamy, Indonesia

JAPAN

“Overall, the Japanese real estate market continues to attract interest from overseas investors, thanks partly to a much weaker Yen, while some remain concerned about inflation and interest hikes, and are taking a wait-and-see attitude.” – Tetsuya Kaneko, Japan

PAKISTAN

“Pakistan loses almost 40% of its agricultural output to a lack of proper storage facilities. New developments in warehousing and cold chain facilities are being driven by the demand for higher standards and sustainability goals led by exporting firms and logistics operators.” – Nadine Malik, Pakistan

MALAYSIA

“Transaction activity in Malaysia during the quarter has been underpinned by interest in both the industrial logistics sector as well as sales of development sites and operating assets. With a number of notable deals scheduled for completion in the second half, the outlook is optimistic.” – Nabeel Hussain, Malaysia

SINGAPORE

“Although transaction volumes in Singapore were lower in Q2/2022, the latent interest in our real estate remains very high.” – Alan Cheong, Singapore

SOUTH KOREA

“Despite the heightened burden on investors from the upsurge in unit prices and the base rate, core investors continue to drive activity in the office sector.” – JoAnn Hong, South Korea

TAIWAN

“A surge in COVID-19 cases and the risk of interest rate hikes in Taiwan have negatively affected buyer confidence with both land and commercial property market activity slowing in the second quarter.” – Erin Ting, Taiwan

THAILAND

“Retailers are refocusing on key retail districts and the second quarter saw activity from major international brands. Despite the absence of Mainland Chinese tourists, the luxury retail market is proving surprisingly resilient.” – Thanjira Wongsathirayakhun, Thailand

VIETNAM

“The first half of 2022 saw several macro prudential policies from the State Bank pushed forward.  Not least is a review of foreign debt instruments, greater transparency around corporate bonds and a restriction in allocation of debt to real estate.  Whist there may be some short term pain for exposed borrowers, the overall long term health of the property sector will be substantially improved.”  – Troy Griffiths, Vietnam

This report was originally published in https://www.savills.co.jp/research_articles/167577/207793-0