Asia Pacific Market Snapshot - Colliers

Asia Pacific Market SnapshotQ1 2021

Capital Markets & Investment Services | Asia Pacific

Terence TangManaging DirectorCapital Markets & Investment ServicesAsia

John MarascoManaging Director Capital Markets & Investment Services Australia and New ZealandState Chief Executive Victoria

Overview

Across the Asia Pacific region, property markets started the year on a strong note, with office, industrial and logistics assets driving the ongoing recovery.

In China, the busy first quarter saw end-users and investors, including foreign investors, closing major deals in key cities. There was a resurgence in investor interest in Hong Kong and Singapore, while Japan witnessed the completion of a number of commercial and residential transactions. In Korea, low interest rates and liquidity continued to fuel demand for office space, a trend likely to persist as competition intensifies for a shrinking pool of assets, while Taiwan saw demand spike for commercial properties. In Australia, a typically quiet quarter witnessed heightened activity in the office segment, while New Zealand’s property market, buoyed by policy changes, low interest rates and expectations of reopened borders, is gearing up for an active year.

In the region’s emerging markets, India saw healthy demand for residential and commercial assets, and investors remain bullish about the market’s medium to long-term prospects. Vietnam’s property sector is in the midst of a rebound supported by government reforms, while Indonesia’s property market is benefiting from a smooth rollout of vaccines and policy changes that should strengthen purchasing power, improve market confidence and encourage investment. Thailand is also witnessing higher levels of market activity, especially in the logistics, warehousing and industrial sectors, but a rebound in the hospitality sector will depend on the resumption of international travel. In the Philippines, where the economy shrunk last year for the first time since 1998, the property market is likely to pick up following the easing of quarantine restrictions and the deployment of vaccines. Meanwhile, in Myanmar, the ongoing political turmoil will affect the near-term outlook, but the market is expected to retain its long-term growth potential, especially in the infrastructure and industrial segments.

Industrial asset sales rise 53% QoQ and 20% YoY to

HKD5.4 billion (USD694.8 million)

Hong KongCommercial transactions

jump 241% YoY to TWD44 billion

(USD1.5 billion)

Taiwan

Investment sales climb 26% QoQ to SGD3.8 billion

(USD2.82 billion)

Singapore KoreaMajor office transaction

volumes reach KRW2.4 trillion (USD2.1 billion)

Guangzhou sees record-high logistics investment worth

RMB7.23 billion (USD1.1 billion)

China AustraliaLeasing inquiries in the Sydney CBD hit

five-year highs

Investors, end-users propel Chinese property market

Several transactions were closed in Q1 by end-users as well as domestic and foreign investors, encouraged by China’s economic recovery. Beijing saw more deals finalised in Q1 than in all of H2 2020, with more expected to close in the coming months. In Shanghai, where 11 deals were completed, end-users were active in the office sector while investors were keen on business parks. Chengdu and Xi’an performed well with eight deals finalised between them, and interest in office and retail properties is likely to remain high. Industrial and logistics assets continue to stand out in Shenzhen and Guangzhou.

An industrial-sized recovery in Hong Kong

Hong Kong’s property market extended its rebound in Q1, led by investor interest in industrial assets. Investors looking to capitalise on local demand will focus on defensive assets while those seeking long-term income will turn to subsectors such as logistics, cold storage facilities and data centres. In the residential segment, resilient prices and strong pent-up demand for small to mid-sized units are prompting developers to consider acquiring sites for new projects, as well as collective sales of old tenement blocks for redevelopment.

Japan property market sees sustained investor interest

Cross-border investors with a presence in Japan completed a number of deals across the logistics, residential and office sectors, despite a renewed state of emergency in major metro areas that dampened demand, especially in the hospitality sector. With investments in Japanese real estate showing few signs of slowing, fresh capital is expected to pursue logistics and residential opportunities in the coming months, as well as office assets at a more modest rate, particularly in major cities beyond the Greater Tokyo region.

Liquidity-fueled office property boom continues in Korea

Transaction volumes and unit prices rose in tandem in Korea’s commercial property market, which continues to be propped up by low interest rates and ample liquidity. As border restrictions limit outbound investments, interest in domestic office space will remain high. Coupled with shrinking supply, this will drive top-quality asset prices even higher and push down cap rates. Interest from domestic as well as foreign investors is expected to spill over into logistics, hiking prices and depressing yields in the segment.

Industrial assets aid Singapore rebound

Amid optimism about the resumption of normal business activities, investors and private funds continued to acquire industrial properties. The Boustead Industrial Fund launch underlined the segment’s importance to the city-state’s property market, which also saw deals close in the commercial segment while activity in the residential sector accelerated further. With business sentiment steadily improving following vaccine rollouts, local and foreign investor interest in commercial and industrial properties is expected to grow, with retail leading the way.

Office segment drives revival in Australia

The office segment led the revitalisation of key Australian property markets in Q1. Sydney CBD occupancy rates rose to their highest level in 12 months as a growing number of workers returned to the office - a trend also seen in Melbourne as the Victorian government lifted restrictions on staff coming in to work. In Brisbane, the CBD office market outperformed all others nationwide last year with the lowest percentage increase in vacancies. A combination of factors, including a public sector-led return-to-office strategy, improving market sentiment and limited asset supply, will pave the way for an even more active Q2 and beyond in these markets.

Please feel free to contact our relevant capital market experts for further insights and in-depth discussions on key trends and opportunities across this fast-changing region.

Asia Pacific markets at a glance – An interactive mapClick through to view specific market snapshots to find out more

Beijing

Korea

Japan

Brisbane

Shanghai

Sydney

South China

India

Myanmar

Singapore

Thailand

Indonesia

Vietnam

West China

Taiwan

Melbourne

Hong Kong

New Zealand

Philippines

Capital Markets & Investment Services | Asia Paci f ic Market Snapshot Q1 2021 | 5

HomeAuckland

Chris Dibble National Director | Colliers Partnerships, Research and [email protected]

• Industrial• OfficeSectors to watch

Carlaw ParkBiggest deal | USD79M | Office

Key market deals

CarLaw Park Location: 15 Nicholls LaneValue in NZD: 110.0 millionBuyer: Local OnshoreSeller: Property For Industry (PFI)

ANZ Centre Location: 23 Albert StreetValue in NZD: 177.0 millionBuyer: ConfidentialSeller: Precinct Properties

13 William Pickering Drive Location: North Harbour, AucklandValue in NZD: 17.3 millionBuyer: ConfidentialSeller: Confidential

Richard KirkeInternational Sales Director | Capital [email protected]

Peter HerdsonNational Director | Capital [email protected]

• Core industrial• Bulk retailMajor movers of the quarter

Investor sentiment is improving, buoyed by the start of New Zealand’s vaccine rollout and the prospect of a gradual reopening of the border. This, in concert with the low interest rate environment, has further bolstered demand for commercial property assets.

Review There is a growing view amongst investors that the worst of the market disruption caused by COVID-19 has now passed. Locally, the situation continues to be well managed. With global vaccine rollout gathering momentum, there is increased optimism and anticipation of a return to relatively normal market conditions and investors are turning their attention to longer-term fundamentals. This has bolstered demand for safe haven assets, particularly industrial and bulk retail properties, both of which are witnessing strong tenant demand. Recent industrial vacancy surveys show market conditions have remained extremely tight, bolstering the view that vacancy is at, or close to, its cyclical peak. Confidence in the office sector is recovering, buoyed by improving demand and supply dynamics with confirmed tenant demand for space within new projects underpinning development activity.

Forecast A continuation of the low interest rate environment over the year ahead will sustain interest in higher yielding commercial property assets. Demand is likely to be further enhanced by recent changes to legislation, which makes residential property investment less attractive. Syndicated property offerings and assets with a value of up to NZD2 million, approximately 80% of the NZ market, are likely to see the greatest lift in demand as a result. The relaxation of border restrictions will result in a rebound in overseas investor activity, which has been hampered over the last year by the inability to inspect property. The prospect of increased competition emerging over the year ahead will incentivise local investors to seriously consider opportunities that arise in the short term. Given the high levels of competition that exist for a limited number of assets, yield compression will remain a feature of the market in this low interest rate environment.

mailto: [email protected]




HomeBeijing

Key market deals

Qidi Science and Technology Complex Block DLocation: Haidian DistrictValue in USD: 408 millionGFA in sqm: 35,500Buyer: GoHigh Capital, China Jinmao, Beijing Capital Dev HldgsSeller: Yangguang Insurance

Fraser Suites CBD Location: Chaoyang DistrictValue in USD: 315 millionGFA in sqm: 37,923Buyer: Tishman SpeyerSeller: Fraser

Q1 recorded nine transactions, higher than the total number of deals in H2 2020. Total area transacted for the quarter reached 171,871 sqm, also higher than Q3 and Q4 last year. However, the total value of RMB6.7 billion was down 22% QoQ, mainly due buyers’ rising risk control and preference for strong liquidity.

Review Domestic and foreign investors completed five transactions totaling RMB5.55 billion, accounting for 83% of the total, up 83% QoQ. Of the five transactions, two were completed by domestic investors totaling RMB 2.79billion. Offices and business parks accounted for six deals worth RMB3.96 billion. An office with value-add potential in the Zhongguancun area was sold to domestic investors for RMB2.65 billion. End-users acquired four properties for a total of RMB1.17 billion. Tishman Speyer closed the acquisition of Fraser Suites in Beijing CBD for approximately RMB2.10 billion. The property has a apartment title and could be strata sold. A mini-storage operator’s acquisition of a retail podium in Fengtai District for RMB240 million.

Forecast Domestic and foreign investor appetite will be rejuvenated as the effect of COVID-19 is gradually decreasing and several delayed transactions are expected to close by next quarter. Office properties in Zhongguancun, Shangdi and CBD areas will be the focus of the market.

• Office• Business park Major movers of the quarter

9En-bloc transactions

USD1.03BCombined value

• Office• LogisticsSectors to watch

Qidi Science and Technology Complex Block D Biggest deal | USD408M | Office

Charles YanManaging Director | [email protected]



HomeBrisbane

Jason LynchNational Director | Capital [email protected]

• Build to rent • Multi-familySectors to watch

IndustrialMajor mover of the quarter

The Brisbane CBD office market outperformed all others nationwide last year with the lowest percentage increase in vacancy, and is forecast to see significant growth in H2 2021. Leasing demand has improved with the ongoing flight to quality and investment activity is forecast to increase markedly in the second half.

Review Despite challenging market conditions, the Brisbane CBD leasing market remained resilient in 2020, with total vacancy increasing by only 15,940 sq m (0.7%), to reach 13.6%. The latest figures from the Property Council of Australia show office occupancy levels in the Brisbane CBD, at 64% as of February 2021, remain well below pre-COVID-19 levels. However leasing demand has started to recover and is expected to consolidate towards the second half of 2021 when the national vaccination rollout program will be approaching completion. As the flight to quality trend has intensified amid the global health crisis there is a clear divergence in the performance of prime and secondary assets, with vacancies and incentives tending to grow faster for lower-quality assets.

Forecast The outlook for the supply of new developments remains constrained. There was only 12,747 sqm of net supply added in 2020, with 44,134 sq m due for completion in 2021. While investment activity in the Brisbane CBD office market was subdued in 2020 we expect a significant increase in the second half of this year.

Note: Market data is reflective of Brisbane Office sector only

Key market deals

310 Ann Street, Brisbane CityLocation: BrisbaneValue in USD: 159 millionGFA in sqm: 18,362Buyer: Ashe MorganSeller: Cornerstone Properties

Don MackenzieNational Director | Capital [email protected]



HomeHong Kong The investment market for industrial assets has witnessed a pick-up in sentiment since the start of 2021 with transaction volumes reaching HKD5.4 billion in Q1, up 53% QoQ and 20% YoY.

Review The government’s latest budget, announced in February, included a pilot scheme to charge standard rates for land premiums to encourage the redevelopment of industrial buildings. We believe this policy will boost investor appetite for industrial assets, fast-track the planning application process, streamline decision-making and improve market transparency.The removal of double stamp duty on non-residential property transactions, announced in November 2020, encouraged some institutional players to actively consider acquisitions in Q1, and the quarter’s most significant transactions involved purchases by real estate funds or developers. Meanwhile, COVID-19 has transformed the retail landscape and led the market to focus on local consumption trends. As a result, some local investors are positioning themselves to catch the rebound by acquiring retail properties in local neighborhoods.

Forecast We believe investors will remain focused on defensive assets and properties with a view to capitalising on local demand. Meanwhile, investors looking to generate long-term income streams are increasingly interested in exploring industrial subsectors such as logistics, cold storage facilities and data centres, which are supported by macro drivers, including growing ecommerce and F&B demand, and expanding 5G and cloud computing networks. On the residential front, developers encouraged by resilient prices and strong pent-up demand for small to medium-sized residential units are looking for sites more actively. While some owners may hold out for a better price, we expect to see more collective sales, especially given that some investors are keen to amalgamate old tenement blocks.

Key market deals

Hang Fat Industrial BuildingLocation: Cheung Sha WanValue in USD: 123.7 millionGFA in sqm: 14,506Buyer: KaiLong ReiSeller: Yuk Cheong Wai Company Limited

Smile Centre Location: FanlingValue in USD: 41.4 millionGFA in sqm: 9,081Buyer: SilkRoadSeller: Bright Sky Investments

Seapower Industrial Centre (G/F to 4/F) Location: Kwun TongValue in USD: 73.1 million GFA in sqm: 10,909Buyer: GoodmanSeller: Samson Paper

Nigel SmithManaging Director | Hong [email protected]

• Industrial • Retail • Office Major movers of the quarter



• Industrial• Neighborhood malls• Residential developmentSectors to watch

Kai Bo Group CentreBiggest deal | USD192.8M | Industrial



HomeIndiaResidential sales maintained momentum given favourable conditions and strong inherent demand. Some large commercial acquisitions were completed and strata offices also witnessed stronger demand as investors look beyond core to development/build to core models. On the industrial side, appetite for in-city fulfillment centres, warehouses and data centres remains robust.

Key market deals

Phoenix Aquilla & CentaurusLocation: Gachibowli, HyderabadValue in USD: 153 millionGFA in sqm: 278,709Buyer: Varde PartnersSeller: Phoenix Group

Prius Platinum Location: Saket, New DelhiValue in USD: 113 million GFA in sqm: 23,876Buyer: New VernonSeller: IBC

Multiple Location: Kochi, BangaloreValue in USD: 76 millionGFA in sqm: 418,064Investor: International Finance Corp.Developer: Puravankara Group

Review Market activity picked up in the residential sector while the industrial sector enjoyed further growth. Due to continued work from home policies, residential sales remained strong and were further supported by low mortgage rates, state government benefits and developers offering discounts to clear unsold inventory. Leasing activity has started picking up and overall absorption for the year will likely be higher than last year although we expect office occupiers are likely to remain indecisive on fresh offtakes due to uncertainties around the return to work. The industrial and warehousing sector continues to attract investment and occupiers, with the share of organised logistics increasing due to the advent of e-commerce and India’s appeal as a global supply chain and manufacturing hub.

Forecast Large private equity and sovereign wealth funds remain bullish on commercial real estate over the medium to long term and are looking to invest in graded commercial assets, as well as forward purchase greenfield assets at attractive valuations. Due to balance sheet stress more land acquisitions/forward purchases are likely to be seen in markets like Bangalore, Hyderabad, Pune and Mumbai. The continued positive performance of residential means more liquidity is likely to flow through the sector as credit funds, banks and global institutions look to deploy capital.

Piyush GuptaManaging Director | Capital Markets & Investment [email protected]

• Residential • Industrial Major movers of the quarter


USD342MCombined value

• Industrial• ResidentialSectors to watch

Phoenix Aquilia & CentaurusBiggest deal | USD266M | Commercial



HomeIndonesiaThe government is aiming to carry out vaccinations for around 181.5 million Indonesians from January 2021 to March 2022. The hope is that this will create herd immunity and the economy will gradually recover, which should have a positive impact on the property market.

Review The government has implemented several short-term incentives to boost the property sector, including a waiver of the 10% VAT on property sales under IDR2 billion, and a 50% waiver on property sales above IDR2 billion to IDR5 billion, valid from March to August 2021. If successful, this could be extended; however, it applies only to existing inventory. In addition, Bank Indonesia has implemented loan to value financing of 100 percent from March 1 to December 31, 2021, though underwriting guidelines remain challenging. The office and apartment markets remain oversupplied and transaction activity is weak. Many office tenants are downsizing and renegotiating rentals and lease terms. Staycations are helping prop up hotel occupancy rates. Shopping mall hours and occupancy rules have been relaxed amid lower COVID-19 infection rates. More property developers are defaulting on loans or facing increased creditor claims, including bankruptcy proceedings.

Forecast The implementation of the Omnibus Law is expected to become a key driver that will strengthen purchasing power, increase market confidence and encourage investment in the property sector. The retail sector is predicted to start moving towards recovery in the second half, but this depends on the success of the vaccination programme. The new Minister of Tourism and Creative Economy, Sandi Uno, is pushing several initiatives including the conversion of USD10 billion per year typically spent by Indonesians on overseas tourism into domestic tourism revenues; a long-term visa policy that would allow foreign tourists to stay in Indonesia for up to five years with a deposit of IDR2 billion or above, and possibly allow investment in property; and opening international tourism in Bali through a travel corridor planned in summer 2021.

• Logistics• Bank / Creditor-driven

property salesSectors to watch

• Affordable landed housing

• Data centres Major movers of the quarter

Steve AthertonDirector | Capital Markets & Investment [email protected]



HomeJapanDespite ongoing border restrictions and a renewed state of emergency in major metropolitan areas, Q1 2021 saw large transactions across the logistics, residential and office sectors, marked by robust activity from cross-border investors with a Japan platform.

Key market deals

Logistics & residential portfolioLocation: Tokyo and OsakaValue in USD: 321 millionGFA in sqm: UndisclosedBuyer: LaSalle Investment ManagementSeller: Undisclosed

Recruit Ginza 8 Building Location: Chuo, TokyoValue in USD: 191 millionGFA in sqm: 16,800Buyer: HulicSeller: Recruit

Takara Leben Residential Portfolio Location: Tokyo and YokohamaValue in USD: 120 millionGFA in sqm: 11,800Buyer: PGIMSeller: Takara Leben

Review Following a better-than-expected economic recovery in the second half of 2020, a renewed state of emergency declaration and “soft” lockdown for Japan’s major metropolitan areas has once again weakened economic prospects and weighed on the office, retail and hospitality sectors. Despite border restrictions being a barrier to overseas capital, investment in Japanese real estate has continued apace. Logistics and residential assets remain the most sought after, the former given compelling demand fundamentals and the latter their defensive qualities. Interest in the high-grade office market appears to be picking up, with domestic corporates to sell and overseas buyers remaining bullish on long-term office demand.

Forecast

With the “Go To” campaign to promote domestic travel suspended in late December and renewed lockdowns weighing heavily on demand once again, an increase in distressed hotel assets is likely in the months to come. Even so, given the high pent-up demand for such assets, there may be fewer opportunities than investors would hope for. Over the course of 2020 and early 2021, opportunistic buyers have anxiously awaited distressed opportunities in the hospitality sector – to little avail. Core-type capital will continue to pursue logistics and residential assets, with an emphasis on portfolios that offer exposure to major cities outside Greater Tokyo. Office investment to continue at a modest pace.

Hideki OtaHead of Japan Capital Markets & Investment Services [email protected]

• Logistics • Multifamily residential • Hospitality Major movers of the quarter



• Multifamily residential in Osaka, Nagoya, Fukuoka

• HospitalitySectors to watch

Kintetsu Group Kinki-Tokai & Fukuoka HotelsBiggest deal | USD563M | Hospitality



HomeKoreaAlthough the size of office investment transactions in the first quarter decreased compared to the fourth quarter of last year, investors’ interest in the Korean real estate market continues, supported by low interest rates and abundant liquidity. With investors remaining focused on the office sector, opportunities to invest in core assets with stable tenants are becoming more limited.

Key market deals

Pine Avenue BLocation: Eulji-ro, Jung-guValue in USD: 548 millionGFA in sqm: 64,225Buyer: Samsung SRA Asset ManagementSeller: KORAMCO REITs & Trust

Doosan E&C Nonhyeon-dong Building Location: Nonhyeon-dong, Gangnam-guValue in USD: 208 millionGFA in sqm: 31,901Buyer: IGIS Asset ManagementSeller: Hana Alternative Asset Management

Yeouido Finance Tower Location: Yeoui-dong, Yeongdeungpo-guValue in USD: 265 millionGFA in sqm: 42,344Buyer: KB Asset ManagementSeller: Keppel Investment Management

Review Despite the macroeconomic uncertainties due to COVID-19, total major office transaction volumes for Q1 reached KRW2.4 trillion (USD2.1 billion), as a number of deals were closed. As the market is full of liquidity and global outbound real estate investment remains subdued, prices in major submarkets are reaching a peak due to competition among investors.

Forecast Low interest rates and abundant liquidity are likely to drive the prices of high-quality assets higher. As domestic investors still favour the office sector, we expect increased competition for office assets with stable tenants. There are fewer prime office assets available on the market in 2021, with competition for a shrinking pool set to intensify. This is driving cap rate declines as prices rise.

Domestic and foreign interest in logistics assets also continues to grow. We expect investors to aggressively pursue logistics assets, depressing yields as prices rise.

Harold LeeSenior Director | Capital Markets & Investment [email protected]

OfficeMajor mover of the quarter



• Office• IndustrialSectors to watch

Pine Avenue BBiggest deal | USD548M | Office



HomeMelbourneVictoria’s state government officially lifted the cap on the return to work on March 29, allowing 100% of staff to return to offices and requiring public servants to work from the office for at least three days a week.

Review Two on-market campaigns were active in Q1, one being 63 Exhibition Street - a B Grade office building with permit approval for a residential and hotel development that exceeds height restrictions under current planning regulations. The other is 469 La Trobe Street - a core plus office investment in the legal district and one of five assets for sale as part of the AMP/Swiss Re portfolio.

Sentiment has improved markedly in 2021. While on-market activity has been limited, off-market interest for assets across the spectrum has rebounded following an unsteady 2020. While investors are now more likely to consider development or value add, leasing risk is still approached with increased caution, given the government’s JobKeeper wage subsidy scheme has been wound back and there remains a clear preference, at least for the time being, for a blended (home and office) approach to work.

Forecast We expect the second quarter to see more activity, both on and off market. Underpinning this assumption is the fact that as of March 28 the Commonwealth Government has removed the JobKeeper wage subsidy programme, which at its peak supported 3.5 million workers. As this programme comes to an end, we are likely to see a small uptick in unemployment.

Combined with the prevalent weakness in the leasing market, we expect increased market activity across assets higher up the risk curve. Value add assets - particularly those held by undercapitalised owners who are not able to reposition assets to compete in the current market - will likely trade. Development opportunities will also trade, notably among private owners, who will look to offload sites that were slated for office developments, given the difficulties in securing large pre-commitments, particularly on the city’s fringes.

Note: Market data is reflective of Melbourne Office sector only

Anna Cavar Associate Director | Capital [email protected]

John MarascoManaging Director | Capital Markets & Investment ServicesState Chief Executive | [email protected]

Build-to-rentSector to watch

• Industrial• Retail Major movers of the quarter




HomeMyanmarThe military’s recent seizure of power and the resulting political and social turbulence has caused major economic setbacks, and may dampen the investment outlook in the immediate term unless political stakeholders soon come to consensus. Despite this, we see Myanmar’s long-term growth potential remaining largely intact, especially for big-ticket infrastructure and industrial developments.

Review Political turmoil hampered market activity in Q1. The World Bank expects the economy to contract by 10% this year, a downward revision following lengthening business disruptions. Market transactions have come to a near-standstill, with many investors shelving purchase decisions while adopting a wait-and-see approach.

However, for large-scale industrial projects including Amata Smart Eco City, Sembcorp’s Singapore Myanmar Industrial Park, and Korea Land & Housing Corporation’s Korea-Myanmar Industrial Complex, there have been signals of long-term commitment and the intention to resume construction once the political situation stabilises. A similar approach has been adopted for major commercial projects by Japanese developers such as Kajima Corporation, Fujita Corporation, Tokyo Tatemono Asia Pte. Ltd, and Aeon Co., Ltd.

Forecast Overall, although some project delays and deferrals are expected in the near term, developers may remain focused on long-term growth potential and wait until some certainty is restored.

Meanwhile, the fate of high-ticket infrastructure projects such as the Yangon Elevated Expressway and Thanlyin and Dala bridges will hinge largely upon the continuity of development assistance from international partners such as Japan and Korea.

• Infrastructure• Industrial Sectors to watch

Karlo PobreManaging Director | Myanmar [email protected]



HomePhilippines The Philippine economy contracted 9.5% in 2020, the worst performance since World War II and the first annual decline since 1998. Despite this, projections are for a rebound of 5.9% to 9.6% in 2021, supported by the easing of quarantine restrictions and the deployment of vaccines. This recovery should have a positive impact on the property market.

Review Office space absorption has continued to slide, with a net take-up of −183,100 sq metres (−1.9 million sq feet) in 2020, down 120% from 2019 – the first ever negative take-up recorded on an annual basis. New supply only reached 425,500 sq metres (4.6 million sq feet) in 2020, down 60% from our initial estimate, as COVID-19 hampered the completion of new buildings. Office rents on average dropped by 17% in 2020.

Residential prices and rents dropped by 13.2% and 7.8%, respectively, in 2020. 3,370 condominium units were completed in 2020, down 70% from 2019. Given the effect of COVID-19 on residential demand and subdued office leasing, vacancy for 2020 set a record high of 15.6%.

Forecast In the office sector, we have observed landlords becoming more flexible in accommodating tenants’ requests for lower lease rates and other concessions. These may come in the form of longer rent-free periods, fit-out allowances and other customised incentives to secure occupancy despite the delivery of substantial new supply in 2021. The pace of recovery in office leasing will likely hinge on the progress of vaccine rollouts. Turning to residential, we expect a rebound in condominium completions in 2021 with the delivery of 10,600 units, which is expected to push vacancy rates up further. In 2022, we expect prices and rents to gradually increase by 1.5% and 1.7%. The pace of growth will likely hinge on a rebound in office leasing and improved investor sentiment. This should be supported by low interest rates and competitive mortgage rates.

Key market deals

Commercial Land in Carmona Light Industrial ParkGFA in sqm: 1,035Seller: Phoenix Group

Ieyo DeguzmanConsultant | Capital Markets & Investment [email protected]

• Residential • Office • Hotel Major movers of the quarter

• Industrial and logistics

• ResidentialSectors to watch



HomeShanghaiEleven transactions were completed during the quarter, totaling RMB16.9 billion. End-users remained active in the office sector while investors are increasingly looking for business park opportunities. Foreign investor activity saw a more pronounced rebound.

Key market deals

Greenland Bund Center T4Location: Huangpu DistrictValue in USD: 854 millionGFA in sqm: 58,799Buyer: CCB LifeSeller: Greenland Group

50% Equity of Qibao Vanke Plaza Location: Minhang DistrictValue in USD: 427 millionGFA in sqm: 148,853Buyer: Link REITsSeller: GIC

90% Equity of Zhangjiang Innov Star Location: Pudong DistrictValue in USD: 339 millionGFA in sqm: 61,506Buyer: Allianz, NPSSeller: D&J China

Review Offices and business parks together recorded eight deals totaling RMB11.75 billion. End-users accounted for four transactions totaling RMB7.17 billion, representing 61% of office and business park transaction value, up 6.1% QoQ and 48.1% YoY. CCB Life acquired Greenland Bund Center T4 for RMB5.55 billion. There were four business park deals worth RMB4.66 billion, up 212% QoQ and equivalent to the total value for the last three quarters. Two high-end apartments with strata sold potential in the core area were purchased by domestic investors, with demand driven by rising housing prices and restricted purchase policies. Foreign institutions closed two deals totaling RMB4.97 billion, accounting for 29% of total transaction value and up 91% YoY. Allianz and NPS purchased 90% of Innov Star, a business park in Zhangjiang,

for RMB2.20 billion. Link REIT acquired 50% of Qibao Vanke Plaza, a stabled retail mall in a DBD area, from GIC for RMB2.77 billion.

Forecast End-users such as insurance companies, banks and securities firms will continue to seek properties for self-use in the CBD. Income-producing business parks will see active interest from both foreign and domestic buyers, who will concentrate on investment opportunities in good locations and with value-add potential.

Betty WongManaging Director | [email protected]

Business parkMajor mover of the quarter



• Office in CBD• Business parkSectors to watch

Greenland Bund Center T4Biggest deal | USD854M | Office



HomeSingaporeSingapore investment sales transactions totaled SGD3.8 billion in Q1 2021, posting close to 26% growth from the prior quarter (excluding transactions involving merger and government land sales). The industrial sector was the highlight for the quarter, while a few notable transactions in the commercial sector were announced after months of negotiations and due diligence.

Key market deals

OUE Bayfront (50%)Location: 50 Collyer QuayValue in USD: 470.6 millionNLA in sqm: 49,237Buyer: Allianz Real EstateSeller: OUE C-Reit

Yew Tee Point Location: 21 Choa Chu Kang North 6Value in USD: 163.4 millionNLA in sqm: 6,844Buyer: Unknown partySeller: Frasers Centrepoint Trust

EDEN (20 units)Location: 2 Draycott Park Value in USD: 222.9 millionStrata Area in sqm: 5,639.2Buyer: Want Want China Holdings Chairman Tsai Eng-Meng,& his son Shao Chung Seller: Swire Properties

Review The industrial sector emerged as the major mover in Q1, largely attributed to the injection of 14 industrial properties totaling SGD468.6 million into newly established Boustead Industrial Fund (BIF). Investors and private funds also continued to acquire industrial properties as part of their investment strategies. Residential transaction activity for private landed housing and good class bungalows (GCB) continued to pick up in Q1, while developers acquired private residential sites through single-owner private land sales or collective sales. Although the commercial sector took a backseat this quarter, notable transactions such as Yew Tee Point and a 50% stake in OUE Bayfront were completed.

Forecast Transaction activity is expected to pick up in Q2, as confidence returns from local and foreign investors in commercial and industrial properties, given optimistic business conditions and Singapore’s pro-business environment. The retail sector could see more transactions as suburban malls have become sought after given their resilience during COVID-19. With recent strong developer sales activity and limited land supply, more developers are likely to source for redevelopment sites through collective sales. Collective sales transactions are expected to pick up over the next few quarters, as sellers prepare their sites for sale. We expect total 2021 transaction volumes to recover to pre-COVID-19 levels, rising 20% YOY to SGD29.7 billion.

WeiLeng TangManaging Director | [email protected]

Industrial Major mover of the quarter

CommercialSector to watch

OUE Bayfront (50% stake)Biggest deal | USD470.6M | Office



HomeSouth ChinaShenzhen recorded three deals worth RMB923 million, with end-users remaining active in office and business parks and investors seeking industrial renewal opportunities. Foreign investors closed a record high logistics investment in Guangzhou at RMB7.23 billion, showing the appetite for opportunities of this kind in the Greater Bay Area (GBA).

Review In Shenzhen, Zhishang Technology purchased a business park in Guangming District for RMB326 million, while Asia Citrus acquired a business park in Longgang District for RMB57 million. A domestic developer closed an industrial renewal investment in Shenzhen.

In Guangzhou, Blackstone closed a deal for 70% equity in Guangzhou International Airport R&F Integrated Logistics Park, the largest logistics park in the GBA with a total GFA of approximately 1.2 million sqm, for RMB7.23 billion.

Forecast In Guangzhou, niche assets such as logistics, health care and data centres will be favored by investors. Meanwhile in Shenzhen, investors are expected to continue looking for industrial renewal opportunities as well as self-use transactions.

Key market deals

70% Equity of Guangzhou International Airport R&F Integrated Logistics ParkLocation: Huadu DistrictValue in USD: 1.1 billionGFA in sqm: 1.2 millionBuyer: BlackstoneSeller: R&F Group

Shenzhen Industrial Renewal Project Location: ShenzhenValue in USD: 83 millionLand area in sqm: 98,980Buyer: Domestic DeveloperSeller: Investment Fund

Alan FungManaging Director | South [email protected]

• Industrial renewal • Business park Major movers of the quarter



• Logistics• Industrial renewalSectors to watch

70% Equity of Guangzhou International Airport R&F Integrated Logistics Park Biggest deal | USD1.1B | Logistics



HomeSydneyOffice occupation in the Sydney CBD rose to its highest level in 12 months after multinational businesses followed the government’s lead in implementing a return-to-office strategy. Leasing inquiries jumped to five-year highs as freshly confident occupiers began planning future space requirements.

Key market deals

1 Bligh Street, Sydney (33%)Location: NSWValue in USD: 284 millionGFA in sqm: N/ABuyer: Dexus Seller: CBUS property

400 George Street, Sydney (25%) Location: NSWValue in USD: 219 millionGFA in sqm: 51,222 Buyer: M&GSeller: Investa

68 Waterloo Road, Macquarie Park Location: NSWValue in USD: $80.6mGFA in sqm: 13,486 Buyer: Private InvestorSeller: AMP Capital

Review The first quarter is typically a low volume one in Sydney, a trend that persisted in Q1 2021 and limited the number of major transactions in the CBD. However, core grade assets continued to attract investor interest with capital finding its way to properties in key locations.

We saw confidence levels grow as the markets reopened, which allowed vendors and investors to review acquisitions following changes in the investment environment.

Forecast In Q2, we expect transaction volumes to rise as a number of current and upcoming campaigns are finalised. Confidence will continue to return across investment grades with core plus and value add investors becoming more active in the Sydney CBD.

Note: Market data is reflective of Sydney Office sector only

Office Major mover of the quarter

• Office• IndustrialSectors to watch

Adam WoodwardHead of Office Capital Markets [email protected]

James MitchellDirector | International [email protected]

James BarberNational Director | Capital [email protected]





HomeTaiwanOverall market sentiment remained positive during the quarter, with the 2021 GDP growth forecast raised to 4.64%. Total transaction volumes for commercial property reached TWD44 billion (USD1.5 billion) in Q1, representing 241% YoY growth and the highest first quarter level on record.

Key market deals

Riant PlazaLocation: HsinchuValue in USD: 195 millionGFA in sqm: 58,114.94Buyer: Shin Kong Life InsuranceSeller: Riant Capital

China Development Financial Building Location: TaipeiValue in USD: 320 millionGFA in sqm: 26,376.40Buyer: Shin Kong Life InsuranceSeller: CDIB Capital Group

Sogo Department Store Dunnan Branch Location: TaipeiValue in USD: 448 millionGFA in sqm: 24,031.4Buyer: Huang Hsiang ConstructionSeller: Ren Ai Corp.

Review Office and industrial sectors remained the major market drivers on the back of expansion needs from manufacturers. The most important industrial hubs, Hsinchu and Taoyuan, enjoyed the growth momentum of key industries such as semiconductors and telecommunications. Shin Kong Life Insurance spent TWD5.64billion (USD195million) on Riant Plaza - a mixed-use complex in Hsinchu. En-bloc assets in the Taipei CBD remained the most desirable to investors, particularly those with redevelopment potential. Huang Hsiang Construction – a listed developer - reportedly acquired Sogo Department Store’s Dunnan branch building for TWD13billion (USD448million) through a share transfer, and Shin Kong Life Insurance purchased the China Development Financial Building for TWD9.3billion (USD320million) through public tender. Both buildings qualify for the urban renewal scheme for potential bonus floor area.

Forecast In March the government implemented a new round of property market cooling measures, including selective credit controls and higher real estate capital gains tax, directed mainly against residential property speculation. The tax revisions subject transactions with a holding period of less than five years to combined property taxes of 35 to 45 percent. The rate will fall to 20 percent after a property is held for longer than five years, meaning the impact of the change on mid- to long-term investors will be relatively limited. Given Taiwan’s solid fundamentals and robust economic outlook, commercial property market sentiment is expected to remain positive in the coming quarters. The office and industrial sectors remain the segments to watch.

• Office • Industrial Major movers of the quarter



• Office • Industrial Sectors to watch

Sogo Department Store Dunnan Branch Biggest deal | USD448M | Retail

Derek HuangExecutive Director | Capital Markets and Investment [email protected]



HomeThailandThe year has started with a significantly higher level of activity. While the mantra for last year was “wait and see,” 2021 has seen buyers establish acquisition strategies and prepare for implementation, while some sellers have shown readiness to reduce pricing to attract investors.

Review While luxury hotels Sindhorn Kempinksi, Four Seasons and Capella have opened in Bangkok in the last few months, Thailand’s large hotel sector remains under enormous strain. For the luxury segment, occupancy rates are hovering under 30%, while lower down the scale many hotels remain shut, particularly in resort destinations Phuket and Koh Samui. Owners have continued to benefit from government-led stimulus measures and loan repayment holidays, easing immediate cash flow stress and helped limit ‘fire sales’ of hotel assets. It has also been a challenging start to the year for the office segment, with occupiers reassessing their needs for space and rationalising their usage, creating a net drop in demand. The residential sector has seen healthy levels of domestic demand, especially around transit routes and for landed housing, and the industrial sector has also shown strong resilience.

Key market deals

BBC Office BuildingLocation: Ekamai Value in USD: 46 million GFA in sqm: 42,200Buyer: B-Work REITSeller: Principal Capital Plc

CBD Land, Ratchada Location: BangkokValue in USD: 35 millionGFA in sqm: 14,400Buyer: AIASeller: Principal Capital Plc

• Hospitality • Office Major movers of the quarter

IndustrialSector to watch

Barny SwainsonSenior Director | Capital [email protected]

Forecast In the hotel sector domestic demand cannot compensate to a significant extent in an industry that is hugely reliant on international visitors. The road to recovery is expected to take three to four years to get back to pre-COVID-19 levels, and we are seeing owners reconsider their positions, which we expect to be reflected by moderate increases to cap rates.

This is in contrast to Thailand’s well-established logistics, warehousing and industrial sectors, especially around Bangkok and within the Eastern Economic Corridor. Demand has not dropped far below normal levels and some specialist sectors, such as data centres, have seen activity increase. Once international travel becomes more practical, we expect activity to generally rise. Cap rates should remain stable for the time being with an outlook for potential declines later in the year.



HomeVietnamVietnam’s economy is recovering after growth hit its lowest in a decade in 2020. The government has set a challenging but feasible GDP growth target of about 6% for 2021. As the administration implements recent legal improvements, the real estate market will continue to rebound

Review Authorities have started to implement changes to the Construction and Investment Law to ensure the consistency of legal processes for investment policy approval, investor approval, investor recognition of residential projects, as well as to encourage FDI flows into social housing development. New updates to land segmentation, plot redistribution regulations, and amendments to a decree on the renovation and reconstruction of old apartment buildings were introduced. Local investors in Southern Vietnam are investing in new residential (second home) projects in Dong Nai, Phan Thiet and Binh Duong, thanks to the commencement of construction of Long Thanh Airport and surrounding infrastructure.

Forecast Due to the uncertainty around COVID-19, purchasing power in sectors such as tourism, agricultural products, commerce and real estate has been significantly reduced. Except for Ho Chi Minh City, where there is slightly higher demand for residential units and land, other regions of the country, including Hanoi, are facing surplus and pricing pressure. However with real estate investment procedures likely to become more efficient and less bureaucratic, the market is seen returning to normal and even reaching new development peaks. The government is well aware of the challenges facing the property sector and is striving to make changes to promote stable economic development regardless of the environment post-COVID-19.


USD183.3MCombined value

• Residential (social housing and second home)

• Office Sectors to watch

Lancaster Luminaire Biggest deal | USD92M | Mixed-use

David JacksonChief Executive Officer | [email protected]

• Residential • Industrial Major movers of the quarter

Key market deals

Lancaster LuminaireLocation: Dong Da District, Ha Noi, VietnamValue in USD: 92 million (Trung Thuy Group - residential)GFA in sqm: 252 residential units, 26,839 (Office), 6,630 (Commercial) Buyers: JV - Trung Thuy Group and Takashiyama subsidiary Toshin Development

Industrial land and factory at Yen Phong Location: Yen Phong, Bac Ninh Province, VietnamValue in USD: 6.877 million (49% stake)GFA in sqm: 96,000Buyer: Boustead Projects (Boustead Singapore)Seller: Bui Duc Manh (KTG Industrial Bac Ninh Development Joint Stock Company)

Dong Nai Waterfront City Project Location: Long Thanh, Dong Nai Province, VietnamValue in USD: 84.49 million (Last 30% stake)GFA in sqm: 1,700.000Buyer: Nam Long Dev CorpSeller: Portsville Pte. Ltd. (Keppel Land)



HomeWest ChinaThe two provincial capitals performed outstandingly in Q1. In Chengdu, domestic investors and local end-users remain active acquirers of office and other properties, which contributed four deals worth RMB1.39 billion. In Xi’an, there were four deals totaling RMB3.26 billion including CapitaLand Commercial Trust (CLCT)’s acquisition of a majority share of two business parks.

Key market deals

Changan Metropolitan Center Blocks A, B, C, D & ELocation: Beilin DistrictValue in USD: 263 millionGFA in sqm: 88,364Buyer: Jianyin Investment, OCT AsiaSeller: OCT Asia

Dagang Ceramic Building Material City Location: Qingbaijiang DistrictValue in USD: 160 millionGFA in sqm: 246,397Buyer: Local SOESeller: Qingbaijiang District People’s Court

Ronghua Outlets Project Location: Xixian New DistrictValue in USD: 123 millionGFA in sqm: 87,573Buyer: Wangfujing GroupSeller: Xi’an Ronghua Group

Review Deals in Chengdu were all completed by local companies. The biggest was the acquisition of a retail property with a GFA of 246,000 sqm in Qingbaijiang District by a local SOE for RMB1 billion. Another local SOE acquired 8,000 sqm in a Grade A office in the High-tech Zone for self-use at RMB120 million. A local investor purchased an office and apartment projects in Jinniu District at a total price of RMB235 million through the foreclosure process. In Xi’an, CLCT acquired a majority share of two business parks from its affiliates for a total of RMB750 million. Jianyin Investment established a Cayman fund in a joint venture with OCT Asia, which acquired Changan Metropolitan Center Block 2 and Block 3 for RMB1.71 billion. Beijing Wangfujing Group also completed an acquisition of an outlet in Xi’an for RMB800 million.

Forecast In Chengdu end-users will remain active while investors will focus on office, retail and mixed-use opportunities. In Xi’an, institutional investors will prioritise income-producing office assets in central areas.

Office Major movers of the quarter



Office Sector to watch

Changan Metropolitan Center Block A, B, C, D & E Biggest deal | USD263M | Office

Keng GengManaging Director | Southwest [email protected]

Lily LiManaging Director | Northwest [email protected]



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