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Positive overview across Asian markets reported during Q1 of 2018 in Asia Market Snapshot - Colliers International

Asia Market Snapshot Q1 2018 reveals positive outcomes on property sector despite heightened market volatility.

Real estate agency Colliers International has detailed a positive overview of property performances across 15 Asian markets for the first quarter of 2018 in its Asia Market Snapshot Q1 2018 report. 

Colliers Findings at a glance:

  • Infrastructure investments in Japan, China and Indonesia set to surge
  • Hong Kong and Singapore remain safe haven markets for investors
  • Hong Kong's biggest deal for Q1 2018, was USD2.09 billion (Kai Tak residential development site)
  • Bangkok seals biggest land deal in Thai history
  • Shanghai reigns as China’s most active property investment market
  • Shanghai saw 15 en-bloc transactions for Q1 2018 totally USD2.4 billion

According to Steve Atherton, Director of Capital Markets and Investment Services at Colliers International Indonesia, the Indonesian market over the course of Q1 “has seen several significant investment transactions, especially in the residential market and industrial sectors." In Indonesia, two en-bloc transactions were made in Q1 2018 totalling USD86 million.

We are also witnessing the first multi-storey logistic warehouse development by a foreign institutional developer; and in the office sector, non-traditional tenants such as start-up companies are acquiring the largest spaces. Atherton goes on to say that "in the next quarter, we believe the industrial and residential sectors will remain the primary focus for many investors. There has been a substantial increase in enquiries we have received from foreign investors planning to enter the market.” 

Infrastructure sets to surge 

Many Asian governments are pursuing ambitious infrastructure projects that have the potential to transform property markets. In Indonesia, for example, an unprecedented government spending drive has boosted the outlook for developments around up-and-coming transportation hubs. India has also taken steps to encourage the construction of affordable housing, which should lend momentum to the residential sector.

In Japan, the property market is expected to remain strong in the lead up to the 2020 Tokyo Olympic Games. And in Chinese cities such as Beijing and Chendu, improvements in accessibility and connectivity have enhanced the appeal of decentralised areas resulting in a marked pickup in buying activity. 

Volatility may lead to upside 

As political and economic uncertainty dims the outlook for other assets, Colliers suggest that prime Asian property markets like Hong Kong and Singapore could see more capital inflows. Both the mass and luxury residential markets in Hong Kong continue to hold up well, with a house at Mount Nicholson recently selling for the equivalent of over USD19,000 per square foot.

Singapore has seen a surge in residential collective sale activity with over USD4 billion transacted in the first quarter of 2018 alone, approaching three-quarters of the total last year.

Seoul, Bangkok set new records

Colliers expects investment activity to pick up in Seoul’s prime office market, with several major deals likely to close in the coming months. The recent purchase of the K-TWIN Towers by Samsung SRA Asset Management set a new record for South Korea’s commercial property sector, recording a unit price of over USD7,000 per sq m.

In Bangkok, meanwhile, the sale of the British Embassy site in the commercial heart of the city for USD591 million marked the largest land deal in Thailand’s history.

Positive outlook for Shanghai

Shanghai remained China’s most active property investment market in the first quarter, with deals totaling over USD2 billion. While recent steps to tighten control over lending to the real estate industry may squeeze some segments of the market, projects with stable income streams will continue to attract investor interest, particularly those aligned with the government’s efforts to upgrade the city’s industrial base.

Industrial, logistics witness strong growth

As regional governments increase their focus on developing or revitalising local industries, industrial property markets are looking more dynamic. In Vietnam, where the industrial sector expanded at a rate of nearly 10% in the first quarter, investors are actively searching for warehousing and logistics opportunities.

Similarly, in Myanmar where manufacturing foreign direct investment remains close to all-time highs, Colliers International believes that the sector is poised for strong growth as more companies look to set up shop in the country. Colliers say the high future growth and development potential of these and other Asian markets mean this is likely to remain a major investment theme for the long term.

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