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Breaking Down Asia’s Real Estate Trends

Breaking Down Asia’s Real Estate Trends

In Monopoly, not all properties are equal.

To win, you must know which are the most popular and which produce the highest returns.

The same logic applies to the actual real estate market.

Charts like the one above are great, but they don’t always tell the full story.

So below we’ve detailed which Asian real estate markets are experiencing healthy growth. With a little luck, you can secure Asia’s next “Park Palace”.

China

Retail:

+ Beijing: Retail-to-Office conversions continue to attract investors.

+ Shanghai: “New retail” concepts are gaining traction as retailers seek to leverage digital strategies.

Industrial:

+ Beijing:

  • Limited available space has pushed investors and property developers to surrounding areas like Tianjin’s Wuqing and Beichen. But rent should still see growth of around 3 percent in 2018 and 2019.
  • There’s a need for low-end facilities after the government started demolishing illegal structures.

+ Shanghai:

  • Vacancy reaches a seven-year low thanks to strong demand and limited supply.
  • Leasing activity has moved away from the once popular West Shanghai area during 2017. Well-connected suburbs like Baoshan, Fengxian, and Jinshan, are seeing more leasing activity.
  • The majority of 2018 projects are located in the Fengxian and Jinshan submarkets. 
  • Residential:
  • New supply hit record lows in the mass and luxury markets.

Hong Kong

  • Office: Demand from Mainland Chinese firms, and narrowing vacancy, caused slight rent growth in 2017.
  • Retail: Investors focus largely on neighborhood centers in non-core areas.
  • Industrial:
  • No completions are expected over the next three years. Small growth expectations.
  • The new Hong Kong – Zhuhai-Macao Bridge could increase leasing demands.
  • Residential: Growth in the high-end market.

Singapore

  • Office: Singapore continues to record the strongest quarterly office rental growth.
  • Retail: Stronger sales and slowing rental declines. Increased retail sales and tourism should drive demand growth for prime retail space.
  • Industrial:
  • Demand from the science, technology and media industries.
  • Rent outpaced capital value in 2017, reversing two years of falling growth. The vacancy rate is expected to fall further in 2018, given limited new supply.
  • Residential: After the 11.6 percent correction since end-2013, prime home prices have bottomed in 2Q2017. Rent is expected to stay steady or increase slightly.

Australia

  • Office: there’s a lack of available high-quality space.

+ Sydney

  • 2017 marked another year of leasing activity alongside limited development, resulting in high rental growth.
  • Positive conditions have created a spike in speculative development activity.
  • Construction activity is expected to increase in 2018.

+ Melbourne:

  • Western city industrial demand was the highest since 2002. It made up 62 percent of all take-up in 2017.
  • Industrial supply is at the highest level since 2008.
  • Land values rose greatly in 4Q2017 due to strong occupier demand, especially in the Southeast, where values have increased 11 to 21 percent.
  • Pricing is expected to peak.

Southeast Asia

  • Office: Southeast Asia 4Q2017 volumes were up 14 percent year-to-year. Manila was the largest contributor by volume. Most Southeast Asian markets had new completions.
  • Residential:
  • In Bangkok, demand for prime grade residential condominiums is expected to remain strong in 2018 by both local and global investors.
  • In Jakarta, projects with unique selling points have had steady sales figures in recent quarters.
  • In Manila, vacancy rate slightly decreases due to healthy condominium demand in 4Q2017. The PHP’s value is expected to decrease giving purchasing power to families for a residential condominium.