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Investment Volumes Decrease in Some APAC Markets in Q1 But Industrial Sector Thriving

Asia Pacific’s property market has seen a decrease in investment volumes in some core markets in the first quarter of 2018. There was, however, a notable increase in demand for industrial properties, particularly in the logistics sector.

Here’s a look at the performance of the region’s property market in the first quarter:

Singapore

The total real estate investment sales volume amounted to S$10.0 billion in 1Q2018, decreasing 8% quarter-on-quarter (QoQ).

The residential sector dominated with S$8.0 billion of transaction volume, while the commercial and industrial sectors lagged at S$0.3 billion and S$0.2 billion, respectively.

Factory output continued to increase rapidly at 17.9% year-on-year (YoY) in January, bolstered by the electronics segment which surged 32.4% YoY. The March manufacturing PMI rose to 53.0, remaining positive for the 19th consecutive month.

Australia

After a record retail investment quarter in Q4 2017, investment volume in Q1 2018 was significantly lighter at AU$763 million. This was driven by considerably fewer deals as well as a smaller average deal size. While a slowdown in investment was expected after a record year, Q1 2018 was also down 28% compared to Q1 2017 (AU$1.06 billion).

Sydney’s industrial market saw an increased demand from the transport and logistics sector, largely in the Outer West precinct.

Japan

Retail sales grew 1.9%, exceeding the previous year’s annual amount and achieving the mark for the first time in three years.

Multi-functional logistics facilities continue to show increasing demand; this need is not limited to refrigeration facilities but also factory facilities. The Nagareyama area, despite concerns with a large influx of supply, has seen strong leasing activities thanks to its proximity to the Tokyo city center, demand-supply balance, and existing tenants in the area looking to expand.

India

There was a 60% drop in overall residential unit launches in New Delhi-National Capital Region (NCR) from the previous quarter to 1,284 units. Majority (80%) of unit launches were in the mid segment in sectors 77 & 33, Gurugram and sector 150, Noida.

Meanwhile, New Delhi-NCR’s retail sector saw no new mall supply recorded during the first quarter of 2018. The overall mall vacancy rate remained similar compared to the previous quarter at 25.0%, noting a marginal dip of 0.3 percentage points.

South Korea

Nine transactions were completed in the first quarter of 2018, totaling around KRW 1.3 trillion. Investment volume was lower than in the previous quarter but it is likely to increase as disposition activities of major office buildings have started.

Vietnam

Total leasable area in Ho Chi Minh City was recorded at nearly 2,480 hectare (ha) from 19 industrial parks (IPs) with no new completions since 2017. Steady improvement in market performance has been recorded as the occupancy rate increased four percentage points year-on-year (YoY) at 70%.

The average asking rent increased to nearly 2.3% YoY to VND3,027,000 per square meter per term (/sq.m./term), equivalent to US$133.3/sq.m./term.

To get the full insights on the region’s property market this quarter, visit our MarketBeats portal.

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