2013 sees record year for real estate investment in Asia Pacific while Office and Residential leasing remains subdued

Jones Lang LaSalle has released its Asia Pacific Property Digest (APPD) for Q4 2013 and the latest quarterly indices for the region’s officeretail and residential markets. In addition to these separate reports the APPD, which monitors over 20 key cities across Asia Pacific, also gives a comprehensive regional overview and provides data and analysis of the industrial and hotel real estate markets. Reflecting on 2013, this quarter’s report details the firm’s forecast of what’s in store for the Asia Pacific property markets in 2014.
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During the final quarter of the year, the Asia Pacific real estate markets continued to record a mixed economic performance, mirroring the preceding three quarters; While 2013 was a record year for commercial real estate investment, office and high-end residential leasing activity remained subdued.
Key highlights include:
  • 2013 a record year for commercial real estate investment in Asia Pacific with transaction volumes reaching USD 127 billion, up 29 percent on 2012. In Q4 2013, volumes reached USD 37 billion, up 38 percent y-o-y, finishing as the strongest quarter since Q3 2007
  • Office leasing across the region remains weak, with only patchy improvement, as corporates stay focused on cost saving. Expansion demand was subdued in Q4 with the majority of activity as a result of relocations. While annual net take up in the region was down 15 percent y-o-y, the weakest since 2009, activity is expected to improve in 2014 as the global economy strengthens. Just one third of the region’s markets experienced quarterly growth in net effective rents in Q4 2013 with Singapore leading the region (up 4.2 percent q-o-q) but falls seen in Beijing, , Hong Kong and Australia. Over the year, Southeast Asia saw the strongest growth with y-o-y increases in Jakarta (25.8 percent), Bangkok (11.5 percent) and Singapore (8.4 percent). Single digit rental growth is forecast for most markets this year with the strongest increases likely to be seen in Singapore, Tokyo and Jakarta. Read the Q4 2013 Office Index for more
  • High-end residential leasing demand remained subdued throughout the quarter while stable rents persisted in most markets other than Hong Kong (-0.8 percent) and Singapore (-0.6 percent) which recorded small declines. Just under half of the nine featured markets saw an increase in capital values during the quarter with Shanghai (4.1 percent) and Manila (4.2 percent) leading the quarterly regional growth while Jakarta (up 18.5 percent y-o-y) was the strongest performer over the year. As a result of continued government cooling measures in various markets, price growth will generally be limited in 2014 with moderate increases forecast for Beijing, Shanghai and much of Southeast Asia but continued downward pressure on the Hong Kong and Singapore markets.Read the Q4 2013 Residential Index for more
  • Retailer demand remains relatively healthy with slower expansion by luxury brands offset by strong demand from mid-tier retailers and F&B operators. Over the final quarter of 2013, leasing activity in the region was mixed while rents were generally flat with the exception of Greater China and Manila: Beijing recording the strongest growth at 2.5 percent q-o-q.  Hong Kong continues to record the highest rents in the region for both Shopping Centres and High Streets. 2014 is likely to see continued robust activity with further moderate rental growth in most markets as a result of demand from mid-tier retailers and foreign brands. Read the Q4 2013 Retail Index for more​
  • Retailers are driving leasing demand for industrial space with moderate average rental growth of around 1.0 percent q-o-q. On the back of an improving export and retail environment, small increases in rents are expected in most markets in 2014
  • The Asia Pacific economy may see some volatility in 2014 as a result of global pressures such as Fed tapering and regional issues including political uncertainty in Thailand, India and Indonesia. However, regional economic growth is still forecasted to be double that of the rest of the world, at around 5 percent.
In addition to the succinct market indices and overviews, the latest APPD includes a series of opinion pieces from across the region:
  • An overview of the Asia Pacific economy and property market - Dr Jane Murray, Head of Research Asia Pacific.
  • A discussion on the recent M&A wave in China’s real estate sector– Daniel Odette, Research, Shanghai
  • A look at whether improving confidence in the Vietnam real estate market is likely to continue – Stephen Wyatt, Country Head, Vietnam
  • A discussion on the office market melting pot in India – Ashutosh Limaye, Head of Research, India
  • An analysis of Sydney’s residential market recovery – Rupa Ganguli, Director, Research & Consultancy, Australia
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