Total real estate investment sales in Singapore dropped by 42% quarter-on-quarter in Q3 2018 to S$6.5 billion as the imposition of fresh cooling measures decimated the residential collective sales market. Meanwhile, demand for logistics space in Tokyo revived after a weak second quarter. And for the first time, asking rent for main street stores in Myeong-dong, Seoul exceeded 1 million KRW per square meter.
Take a closer look at the performance of some of the region’s property markets in Cushman & Wakefield’s Q3 2018 Asia Pacific All Sector MarketBeats:
Volumes in the residential sector collapsed 72% quarter-on-quarter to S$2.0 billion after the imposition of recent cooling measures halted the residential collective sales market. Only two collective sales totaling S$353.0 million were transacted, in stark contrast to the $$3.8 billion worth of deals in the second quarter.
After a lackluster fiscal year end in the second quarter, demand for logistics facilities revived in the third quarter. The completed Gaikan Road (Expressway) in Chiba has successfully shortened travel times between Kouya JCT and Misato JCT/Kawaguchi JCT by about 26 minutes. The improvement in convenience contributed to the expansion of demand in the Nagareyama area.
The retail sector in Hong Kong had a strong performance in the first half of the year. Retail sales over the first two months of the quarter grew 8.6% year-on-year compared to 13.4% y-o-y over 1H18. This upward trend is set to continue albeit at a relatively moderate pace.
Rents for main retail streets in Myeong-dong, Gangnam and Garosu-gil have risen as compared to the same period last year. For the first time, Myeong-dong’s asking rent for main street stores exceeded 1 million KRW per square meter. This reflects expectations of a recovery after China lifted its ban on tour groups to South Korea. Garosu-gil’s asking rent also showed a slight increase from the previous year to 343,481 KRW/sq m.
The Australian commercial real estate investment market continues to perform strongly with AU$10.2bn invested in Q3 2018 – the strongest Q3 result since 2014 when AU$10.7bn was invested (as a result of large scale M&A activity). This brings the annual total to over AU$25bn compared to AU$23.5bn at the same point in 2017. New South Wales is the country’s most active market, securing AU$4.7bn in Q3 and AU$11.3bn for the year. The office market has been especially active, accounting for 60% of investment in the state for the year.
Roughly 90% of Hanoi’s residential transactions in the quarter were from Grade B and Grade C segments. The suburban districts with more affordable projects held the largest market share of total sales volume at 40%, followed by the West with 33%. Meanwhile, purchases of Grade A apartments in Ho Chi Minh City doubled from the previous quarter and previous year, mainly due to the strong sales performance of new supply.
Demand from short-stay guests in Jakarta during holiday season and the Asian Games in August and September have increased the overall occupancy rate of the serviced apartment sub-sector to 77.2%, which is up 3.2 percentage points from the second quarter this year. Occupancy rate of purpose-built rental apartments remained stable with positive demand at 70.9% during the review quarter.
Impact of US-China Trade Tension
Any escalation in trade tensions between China and the US may result in a boon for Singapore’s industrial sector. This is as US President Donald Trump’s imposition of tariffs on Chinese exports may lead to companies shifting some of their manufacturing base out of China to South-East Asia.
High-tech manufacturing activity could conceivably make its way to Singapore due to the requirement for a skilled workforce. This would boost demand for high-tech and business park spaces. As a regional logistics hub, Singapore is also poised to benefit from the restructuring of the global supply chain.
Hong Kong’s retail sector, on the other hand, is likely to come under pressure going into the final months of the year, as concerns grow over rising trade tensions and a depreciation of the RMB, which has fallen by 10% against the HKD since April.