asia real estate 2013 forecast
DESCRIPTION
Colliers International is delighted to present the Asia Real Estate Forecast for 2013. The summary section of the paper provides the top-down analysis on the key trends in macroenvironment in Asia as well as the prospective trend on the major property sectors in the region. The country section covers major cities in Asia with property forecast and projections on both rental and capital values for 2013. As a snapshot, one of the notable trends in 2013 is that real estate prices will remain positive in 2013. More occupiers are expected to go for acquisition rather than leasing amid the continued surge in rentals. Office tenants would take the supply cycle in individual cities as an opportunity to upgrade themselves to better quality premises.TRANSCRIPT
Asia Real Estate2013 Forecast
ContentIntroduction
Section 1 - Asia Real Estate 2013 Forecast • Office:Drivenbycost-savingsandthecontinuedflighttoquality • Residential:Citieswithpent-updemandwilldowell • Retail:Poweredbygrowingurbanisation • Industrial:Intra-regionaldemandspilledoverfromChina
Section 2 - MarketsGreater China • Beijing,China • Chengdu,China • Guangzhou,China • Shanghai,China • HongKong • Taipei,Taiwan
North Asia • Tokyo,Japan • Seoul,SouthKorea
Southeast Asia • Jakarta,Indonesia • KualaLumpur,Malaysia • Karachi,Pakistan • Manila,Philippines • Singapore • Bangkok,Thailand • HoChiMinhCity,Vietnam • Hanoi,Vietnam
India & Central Asia • Bengaluru,India • Chennai,India • Mumbai,India • NCR(Delhi,NoidaandGuragon),India • Kazakhstan
Colliers international isdelightedtopresenttheAsiaRealEstateForecast for2013.Thesummarysectionofthepaperprovidesthetop-downanalysisonthekeytrendsinmacro-environmentinAsiaaswellastheprospectivetrendonthemajorpropertysectorsintheregion.ThecountrysectioncoversmajorcitiesinAsiawithpropertyforecastandprojectionsonbothrentalandcapitalvaluesfor2013.
Asasnapshot,oneofthenotabletrendsin2013isthatrealestatepriceswillremainpositivein2013.Moreoccupiersareexpectedtogoforacquisitionratherthanleasingamidthecontinuedsurgeinrentals.Officetenantswouldtakethesupplycycleinindividualcitiesasanopportunitytoupgradethemselvestobetterqualitypremises.
Itrustyouwillfindtheresultsofthispaperofinterest.
Colliers International 5Asia Real Estate 2013 Forecast
In2013,realestateprices intheregionarepredictedtostay intheupwardtrendnotjustbecauseoftherisingpricesofcommoditiesincludingsomeconstructionmaterialsfromthereplacementcostanglebutalsothegrowthexpectationsintheregionandtheunderlyingdemandfromend-users,occupiersandinvestors.
LookingattheprospectiveGDPgrowthintheregion,Chinaisgoingtobethekeydriverwhichispredictedtogenerateasignificantpositivespill-overtotherestofcountriesinAsia.Shortlyaftertheconclusionofthe18thNationalPeople’sCongress in4Q2012,economicgrowthofChinain2013ispredictedtobestronger.Themainreasonisthatmassive investmenthasbeenmade inanumberof infrastructureprojectswhichwilldefinitely drive growth.Meanwhile, the prevailing relaxedmonetary policy is going tosustainin2013giventherateofpriceinflationhasbeenstayingatlowlevel.Comparing2013to2012,theonlydifferenceisthatthegrowthrateofrealestatepricesisexpectedtotaperoffslightlyfromtherangeof5-9%peryearin2012to2-5%peryearin2013.
Asia Real Estate 2013 Forecast
Real estateprices for 2013 remain positive
Furthertothegeneralfallofinvestmentyieldsin2012,thesameisgoingtohappenagainin2013acrosstheboardbutthedegreeofcompressionwillbemuchslowerbetweenflatand10basispoints.Ontheonehand,occupiersareexpectedtotakeadvantageoftheprevailing low-interestrateenvironmenttoacquirerealestate for long-termoccupationratherthan leasing.Ontheotherhand,investorswhohavepreviouslybeenconstrainedbylimitedloan-to-valueratiosareexpectedtotakeonmorerisksincompletingdealsgiventhesupportbymostbanksandother lending institutionsonbothcoreandmezzaninerealestatefinancingin2013.
Renters becomebuyers; Yieldsto compress
Colliers International 7Asia Real Estate 2013 Forecast
Breaking down by sector, the office sector is going to seemore rentalweakness primarily because of the impact arising from thecurrentsupplycycle.Although individualoccupiersmighttake itasanopportunitytorelocateandupgradetobetterqualitybuildings,theintroductionofnewdevelopmentsisgoingbringdowntheaverageoverallrentalratesatleastovertheshortterm.Moresignificantdownwardpressurewillbeinevitableincitieshavingplentifulvacantspaceavailableforimmediateoccupation.Forexample,citiesinIndiawhereexistingvacancyisontheorderof15-20%aregoingtoexperiencearentalcorrectionof2-3%in2013.Meanwhile,Singaporewillcontinuetoseeamplenewdevelopmentscomingonline.Rentsarethereforepredictedtobemadecompetitiveinordertoluretenants.Similarly,thegrowingnewsupplyinHoChiMinhCityandHanoiwillsendofficerentsfurtherdownsincethenewprojects,mostlylocatedoutsidethecitycore,areanticipatedtobepitchedatratessignificantlylowerthanthoseintheCBD.
Offices: Driven by cost-savings and the continued flight to quality
In2013,thetopthreeofficeperformers indescendingorderarepredictedtobeJakarta,BeijingandBangkok.Similarto2012,Jakartawillcontinuetosteal the limelightwithananticipated35%rentgrowththankstothebuoyant leasing demand from overseas companies engaged in banking and finances. Beijing expects a rentalgrowthof10.9%,withmanydomesticfirmsandsomeMNCscontinuallyseekingofficespacesforrelocationandexpansion.Bangkokwilledgeupanother10%in2013primarilybecauseofthelackofnewsupplyintheCBD.However,theoverallgrowthpaceisgoingtobedilutedbytheforthcomingnewsupplyandthedeferredcompletionsofanumberofbuildingsto2013.
*NCRdenotesDelhi,NOIDAandGurgaon
Office Rents 2013 Forecast
Colliers International 9Asia Real Estate 2013 Forecast
Duetothestrongunderlyinggenuinedemand,theflowofliquidityandtheadditionalpushfromprice inflation, residential real estate prices inmostAsian cities showed differentdegreesofupsurgefromflatgrowthtomorethan26%in2012.Asapre-emptivemovetostopresidentialmarketsfromdevelopingintoassetbubbles,individualgovernmentshavebuiltupfirewalls intermsofbuyingandlendingrestrictionstocoolresidentialprices intheirhomemarkets.
Duetotheimplementationofadditionalbuyers’stampduty(ABSD)sincelateDecember2011,SingaporewasjustoneofthefewcitiesinAsiarecordingnegativepricegrowthin2012.Followingsuit,HongKongintroducedbuyers’stampduty(BSD)in4Q2012torestrictnon-localbuyingactivityintheresidentialmarket.AlthoughresidentialpricesinHongKongmanagedtorise3%in2012,themarketdirectionispredictedtoreversein2013.
Residential:Cities with pent-updemand will do well
Asia Real Estate 2013 Forecast
Nevertheless,residentialmarketsinmostAsiancitiescontinuetolookgoodthankstothegenuinedemandfromthelocalresidentswhichhavebeengrowingduetonaturalbirthratesandmigrationofresidentsintourbancentres.Beijingwillcontinuetoseerobustcapitalgrowthduetolimitedsupplyinthemarketplace.Jakarta,ManilaandthekeycitiesinIndiaaretypicalcasesshowingsustainedgrowthintheresidentialmarketastheygraduallyrecoverfromtheglobalfinancialcrisis(GFC)whichhappenedinthesecondhalfof2008.Othermacro-reasonsaretheirmassiveinternalconsumptionbaseandthetrendofsustainedinflation.
*NCRdenotesDelhi,NOIDAandGurgaon
Residential Capital Values 2013 Forecast
InJakarta,demandforstrata-titleunitshasbeengrowingsince2012.Potential upsiderisk remains in 2013 because of limitedsupply of stock particularly in the CBDandSouthJakarta.Demand for residentialproperties in India has been buoyant butsupplywastightin2012duetothedeferredcompletionsofnewprojects. If localbankssoften their stance on financing to localdevelopers, more new supply is expectedtocomealong,thusslowingtheprospectivepricegrowthto8%in2013.
As a first-tier city in China, Guangzhouwill continue to see its residential marketbeing regulated by the prevailing buyingrestrictions. However, sales prices arepredictedtoedgeupfurtherby5%duetothe strong demand from end-users and anumberofhigh-net-worthindividuals.
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Colliers International 13Asia Real Estate 2013 Forecast
Closelylinkedtothetrendofpopulationgrowthandlimitedlandsupplyintheurbancore,retail rentals largelyshowedpositivegrowth in2012.Newretailsupply inthe formatofcommunityshoppingmallswillcomedownthepipelineindecentralisedlocationsoutsidethecitycore.Thankstofundamentalsupportbylocalresidents,Jakartawillseeanotherstrongyear in2013with rentspotentially goingupby20%during theperiod.Tomostresidents in Pakistan, shopping malls are essentially a new concept since there werevirtuallynoshoppingmallsinKarachifiveyearsago.Withtheon-goingstructuralchangeinthemarket,qualityshoppingmalldevelopmentsincentrallocationshavebeengraduallyacceptedbythecommunitywiththeaveragerentnearlythreetimesmoreexpensivethanstand-aloneretailfacilities.Rentsareexpectedtogatheradditionalgrowthmomentumtoriseover10%in2013.
Retail: Powered by growing urbanisation
Asia Real Estate 2013 Forecast
Retailrentsinthefirst-tiercitiesofChinaremainpositivethankstothecontinuedincreaseinhouseholdincomeandtheencouragingdouble-digitgrowthofretailsales.Demandfromoverseaslabelsremainskeenonopeningtheirflagshipstoresinthefirst-tiercities.Withnewsupplyduetobecompletedlargelyinnon-traditionalareas,rentgrowthisgoingtogoflatorrisemoderatelyby1to3%in2013.Chengdu,oneofthemajorsecond-tiercitiesinChina,willdeliverexceptionalperformancethankstothedemandfromnewbrandsandtheexpansionaryrequirements from localretailers.Marketsentimentwillbe furtherbuoyedsincethenext“Fortune”GlobalForumisgoingtobeheldinChengduinmid-2013.However,withmorecompetitivestockdueforcompletionin2013,rentgrowthispredictedtotaperoffto5%in2013.InHongKong,rentswillgrowfurtherin2013.However,thepaceofgrowthisexpectedtotaperoffto9%sincethediscretionaryspendingbymainlandvisitorsmakingupmorethantwo-thirdsofthetotalinboundtouristsisforecasttoslowintandemwiththeperformanceofotherassetmarketsinChina.
InSingapore,rentsofprimeretailshopswillremainweakin2013furthertosomedownwardrental adjustment in 2012. The key challenges are the shrinkage of operatingmargins,growing competition and the shortage of labour amid the general slide of discretionaryspendingbylocalresidents.ProspectiverentfallinVietnamislargelyduetotheforthcomingnewsupplyintheoutskirtareaswhererentsaremorecompetitivethaninthecitycentre.
Retail Rents 2013 Forecast
Colliers International 15
Colliers International 17Asia Real Estate 2013 Forecast
Largelyabovemarketexpectations,theindustriallogisticsmarketshowedpositivegrowthontheleasingfrontin2012despitethechallengesintheexternalenvironmentincludingthesovereigndebtissuesintheeuro-zone.Itappearsthatthesectorisgoingtoperformagainanddeliverevenstrongergrowthin2013iftheeconomyinChinacanresumeitsgrowthmomentumaftertherecentperiodofstabilisation.Inourview,itislikelytohappenasthegovernmentinChinahasmademassiveinvestmentinanumberofinfrastructureprojectssince3Q2012andisdeterminedtorevivetheeconomybyboostingdomesticconsumption.Industriallogisticswarehousingisgoingtobenefitfromthetrendsinceprivateenterprisesincludingthoseengagedinthefast-movingconsumergoods(FMCG)sectorwillcontinuetooutsourcelogisticsfunctionstothird-partylogistics(3PL)operatorstosavecosts.
Industrial:Intra-regional demand spilled over from China
TheindustrialsectorofBeijinginparticularisgoingtobethestarperformerin2013.Capitalvaluesareexpectedtoincrease12.5%in2013duetothetightsupplyandsustaineddemand.Jakartacontinuestolookstrongin2013althoughprospectivebuyersarebecomingmoreresistanttothecurrentpricelevels.InBangkok,thevolumeofsalesactivityinthecityareahasbeenslowbutpricesareexpectedtobesupportedbyend-userswhohavegraduallyturnedtheirfocustothefringeareasofBangkok.InKualaLumpur,industrialrealestatelookspositiveduetothesupportbythegovernmentviagrantsandincentives.Capitalvaluesareexpectedtobesupportedbyforeigncompaniesfrom,forexample,SingaporelookingtorelocateandsetuptheiroperationsoutsideKualaLumpur.NCRinIndiaagainisanticipatedtoseefurthercapitalgrowthprimarilyduetotheupgradingdemandfrommanufacturersinlightindustriesandtheIT/ITessector.Meanwhile,theindustrialsectorinSingaporewasthestarperformerin2012,withrentsincreasingby10%andcapitalvaluessurgingby26%duringtheyear.However,therecentstrongrun-upinindustrialpropertypriceshaspromptedtheGovernmenttoimpose,witheffectfrom12January2013,aSeller’sStampDuty(SSD)onindustrialpropertiesthataresoldwithinthreeyearsofpurchase.Giventhesustainedlong-terminvestmentdemand,industrialcapitalvaluesareexpectedtostayflatin2013.
InChina,prospectivecapitalgrowthfor logisticswarehousesinGuangzhouwillbestrongerthantheotherpropertysectorsthankstothesupportfrompurchaserswhoareplanningtobuildmanufacturingormachineryassemblyfacilities.InShanghai,thelocallogisticswarehousing sectorwill seemore exciting growth thanks to increasing real estate requirements from overseas companieswho areengagedinthespecificindustries(e.g.high-techmanufacturing)preferredbythegovernment.
SeoulandTaipeiarepredictedtoundergoshort-termdownwardadjustmentsin2013.TheindustrialrealestatesectorinSeoul,primarilygearedtowardsmanufacturingindustries,ispredictedtoremainweaksinceinvestorsarescepticalofthedemandforimportsbythemajoreconomiesinthewest.ThemarketinTaipeiisgoingtobeaffectedbytheprevailinggovernment’sdeterminationtoopenthemarkettootherinvestorsinsteadofbeingtoodominatedbylocallifeinsurancecompanies.CitiesrelyingheavilyonexportstomatureeconomiesintheUSandtheeuro-zonewillseeamoresignificantdownwardadjustmentoncapitalvaluesin2013.
*NCRdenotesDelhi,NOIDAandGurgaon
Industrial/Logistics Capital Values 2013 Forecast
Colliers International 19Asia Real Estate 2013 Forecast I Beijing, China
Beijing, China
Theworldeconomyisprojectedtopickupgraduallyin2013,withChinaremainingtheglobalgrowthleader,giventhecabinetreformatduringthe18thNationalCongress,theacceleratingdevelopmentofkeyinfrastructureprojectsoutlinedinthe12thFive-YearPlan,andthesteadydomesticeconomicgrowth.
DemandforBeijing’sofficepropertiesisexpectedtobestablein2013,withmanydomesticfirmsandsomeMNCscontinuallyseekingofficespacesforrelocationandexpansion.TheunbalancebetweentightsupplyandstabledemandintheGradeAsector should be somewhat cushioned by several new completions in 2013. Theoverallvacancyrateisprojectedtoedgeup,duetorelativelylimitedpre-commitment
1OfficereferstoGradeAoffices
2Residentialreferstoluxuryapartments
3Retailreferstomid-tohigh-endshoppingcenters
4Industrialreferstothelogisticssector
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 19.4% 15.4% 10.9% 8.9%
Residential2 21.1% 26.1% 12.3% 16.7%
Retail3 6.5% 5.0% 4.6% 4.6%
Industrial4 10.7% 12% 9.4% 12.5%
GreaterChina
ratesofthenewsupply,butshouldremainatasingle-digitlevelof5.5%byend-2013.Assetperformanceisexpectedtoberelativelystable,too,withrentalandcapitalvaluesgrowingmoderately.Duetolimitedavailabilitiesandstrongdemandfromend-users,somesubmarketsshouldcontinuetoseeyieldcompressions.
The overall retail propertymarket remained positive in 2012,with rental and capitalvalues growingmoderately, in spite of cautiousspendingattituderisingonthebackofthevolatileworldeconomyandslowingdomesticeconomics.In2013,demandofretailersfromtheF&B,children’seducation,health&beautyaswellaspersonalcaresectorsshouldremainstrongwhilstthatofluxuryproductretailersshouldcontinuetoweakencomparatively.Fixedrentsandcapitalvaluesareforecasttogrowatasingle-digitpaceandyieldsareexpectedtoremainflatthroughout2013.
Inspiteofthecentralandlocalgovernments’tightenedpoliciesandlendingcontrolsonthehousingmarket,theoverallresidentialsalesmarket remained positive in 2012. The lettingmarketwas healthy too,with rental growth logged in at 21.1%YoY by end-2012. Thecontinuationoftheaforementionedpolicieswillbethehighlightin2013,continuallycurbingspeculativepurchasesandpreventingexcessivegrowth inpropertyprices.Demandforowner-occupancyandhousingconditionupgrades intheoverallresidentialpropertymarket isexpectedtoremainstable,underpinningthepriceup-ticks.
ThegrowthmomentumforBeijing’slogisticpropertymarketcontinuedin2012,fueledbythrivingbusinessexpansionsinthe3PLandE-Commercesectors.Thedisequilibriumofinsufficientsupplyandstrongdemandforleasingandinvestmentcontinuedtoleadtoafurtherupwarddriftonbothrentalandcapitalvalues.Theoutlookofthepropertysectorin2013shouldcontinuetobestrong,withinvestmentreturnsstabilisingoverthenext12-24months.
Asia Real Estate 2013 Forecast I Guangzhou, China
Guangzhou, China
Colliers International 21Asia Real Estate 2013 Forecast I Chengdu, China
Chengdu, China
Theofficerentalmarketsawamildcorrection in2012sincemostmulti-nationalcorporations were largely cost cautious on their real estate budgets. However,sizeable local enterprises and state-owned companies engaged in energy,infrastructureandmanufacturinglookingforexpansionareexpectedtotakeuptheslack in2013.Tenantswill betakingthenewsupplycomingon lineasamarketopportunitytoupgradefromoldertobrand-newGradeAofficedevelopmentswithqualitymanagement.
Theretailsectorcontinuestolookpositivein2013duetothedouble-digitgrowth(i.e.16%YoYinmid-2012)ofretailconsumptioninthecity,theincreasingnumber
ofnewbrandsandtheexpansionaryrequirementsfromlocalretailersaswell.However,thechallengetothemarketistheprospectivecompletionofabatchofnewsupplywithsimilarphysicalsettingsandtargetedspendinggroupsoverthenext12to24months.Anumberofretailerswillbeluredtobrandnewprojects,thusleavinglessconvenientdevelopmentssuchasthoselocatedoutsidethe3rdRingRoadwithslowerrentgrowthnextyear.Withtheadditionofnewstock,theoverallretailrentgrowthispredictedtoslowto5%in2013butretailcapitalvalueswillbegoingupsteadilyontheorderof3%peryear.
TheofficerentaltrendinGuangzhouisgoingtoreverse in2013duetotheprospectivesupplycomingonlineroughlyrepresentingadoublingofthehistoricalaveragecompletionrate,whiletherearenosignsofexpansiononthedemandfront.Prospectivebuyersareexpectedtobeconservativeinmakingtheirbidssincesalespriceshavesubstantiallyincreasedinthepastcoupleofyearsandthecurrentinvestmentyieldshavebeencompressedtoabout2-3%peryear.Assuch,itisourpredictionthatthepotentialupsideforcapitalvalueswillbelargelycappedat4%in2013.
In the residentialmarket, the prospective growth of capital valueswill be constrained by the prevailing buying restrictions.With theprospectivelaunchofafewsuper-luxurydevelopments,theaverageunitpriceswillbeslightlyhigher.Althoughthevolumeisthin,salespricescouldbesupportedbytheprevailingstrongdemandfromend-usersandanumberofhigh-net-worthindividuals.
Intheretailsector,newmallscomingonlineinGuangzhoucitywillbelimitedduetothelackofdevelopmentsites.Rentgrowthforexistingmallswilldependonthesuccessfulrestructuringoftenantmix.Developmentofnewmallsinthesuburbanlocationswillbetheon-goingtrendbutunitrentsareusuallyofferedatlowerrates.Salestransactionsaregenerallyconfinedtogroundfloorshops.Asusual,itisauniquesectordrivenprincipallybylocalplayers.
Intheindustrialsector,single-levelfacilitieswithhighheadroomateightmetersoraboveandsiteareaontheorderof3,000and10,000sqmwillremaininthemarketfavourin2013.Rentgrowthisgoingtobesteadyatabout3%in2013duetothesupportfrommanufacturingandmachineryassemblyactivity.Prospectivecapitalgrowthwillbethestrongestamongtheothersectorssincedemandwillbebuoyedbypurchaserswhoareplanningtobuildfortheirownuses.
1OfficereferstoGradeAoffice
2Residentialreferstoshoppingcenters
1OfficereferstoGradeAofficesintheCBD
2Residentialreferstotheunitsintheluxurysector
3Retailreferstoshoppingmalls
4Industrialreferstologisticswarehouseandsingleandmulti-storeyfacilitiesinindustrialparks
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 -2.0% 3.0% 6.0% 4.0%
Residential - - - -
Retail2 8.0% 3.0% 5.0% 3.0%
Industrial - - - -
2012 2013
(% growth YoY) Rents Capital Values Rents Capital Values
Office1 7.0% 12.0% -3.0% 4.0%
Residential2 10.0% 3.0% 8.0% 5.0%
Retail3 1.0% 3.0% 1.0% 1.0%
Industrial4 5.0% 8.0% 3.0% 6.0%
1OfficereferstoGradeAoffice
2Residentialreferstohigh-endunitslocatedintraditionalluxurylocations
3Retailreferstoground-floorshopsintraditionalshoppinglocations
4Industrialreferstofactoryandwarehouses
Colliers International 23
In2013, asking rentswill be raisedatbetterqualityofficebuildingscomingontothemarketin2013.However,theanticipatedrentgrowthwillbeslowerin2013inanticipationofslowerdemandgrowthandabatchofnewsupplycomprisingabouthalfamillionsquaremetresandthecompletionofafewbuildingsbeingdeferredto2013.Theofficesalesmarketisexpectedtoperformwellwiththestrongestgrowthamongtheotherrealestatesectorsin2013thankstothesustainedbuyinginterestsfromanumberoflocalinstitutionsandgrowinginterestamongdomesticplayers.
Giventheprojectionthattheprevailingbuyingandlendingrestrictionsonthelocalresidentialsectoraregoingtoremain intact,bothresidentialpricesandrentsare
Colliers Asia Real Estate Forecast 2013 I ShanghaiAsia Real Estate 2013 Forecast I Shanghai, China
Shanghai, China
1OfficereferstoprimeofficesintheCBD
2Residentialreferstohigh-endunitswithunitpricesatRMB40,000persqmorabove
3Retailreferstoshoppingmallsinbothcoreanddecentralisedlocations
2012 2013
(% growth YoY) Rents Capital Values Rents Capital Values
Office1 10.0% 11.0% 6.5% 7.5%
Residential2 1.0% 3.0% 1.0% 3.0%
Retail3 1.1% 3.0% 1.1% 3.0%
Industrial 6.4% 7.0% 4.0% 5.0% Logistics
Industrial 2.8% 2.8% 2.5% 2.5% Workshop
expectedtoseeonlymildgrowthontheorderof1-3%atbestin2013.Assuch,realestatecapitalvaluesinothernon-commercialsectorsarepredictedtoenjoytheshiftofinvestmentcapitalandthebenefitsofaprojectedeconomicrecoveryin2013.
Theon-goingtrendofretailsalesinShanghairemainssolid.However,theretailrealestatesectorwillberelativelyflatin2013becauseofthesupplycycle,thusputtingacaponbothrentsandcapitalvalues.
Intheindustrialmarket,workshops,largelyfactoriesaregoingtostageamildgrowthin2013butthelocallogisticswarehousingsectorwillseemoreexcitinggrowthduetogrowingrealestaterequirementsfromoverseascompanies.However,thechallengeisalwaystheavailabilityoflandfordevelopmentalthoughspecificpreferredindustriessuchashigh-techmanufacturingcouldreceivespecialtreatmentfromthelocalgovernmentontheprocurementofindustrialsites.
Asia Real Estate 2013 Forecast I Hong Kong
Hong Kong
Despitethegeneralsofteningofrents,officeyieldswerecompressedfurtherin2012duetoinflationandcapitalflowfromthelocalresidentialsector.Officerentswillbuckthedownwardtrendin2013thankstosteadygrowingoccupationaldemandinthelegalsectorandthecontinuedsupportfrommainlandcompanies.Buyinginterestsincludingboth investorsandend-userswere immense forofficedevelopments indecentralisedlocations.InanticipationoffurtherrentstabilisationintraditionalCBDmarkets,salespricesincoreareasarepredictedtocatchupin2013.
The coolingmeasures implemented by the government on the residential sectoractuallyledtoanimmediatevolumecontractionin4Q2012.Upwardpricemomentum
stalledandhousingrents fell5%YoYascorporatetenantsdowngradedthemselvestomoreaffordablepremises.Lookingahead, thecurrenttrendofcapitalgrowthisgoingtobesustainedexceptintheresidentialsectorwhichispredictedtoconsolidateby10%asaresultoftheBuyers’StampDuty(BSD).
Intheretailsector,rentgrowthisgoingtotaperoffin2013sinceretailershavebecomemorerealistictomaketheiroffersmoreinlinewiththetrendofretailsales.Capitalvaluescouldseedouble-digitgrowth,againduetothestronginvestmentdemand.
Intheindustrialsector,prospectiverentgrowthisexpectedtostaysteadyin2013butcapitalgrowthispredictedtoslowtoabout10%afterthedistinctyieldcompressionin2012.However,qualitylogisticswarehousesareanticipatedtoseeoutperforminggrowthduetothelimitedsupplyinthemarketplace.
2012 2013
(% growth YoY) Rents Capital Values Rents Capital Values
Office1 -3.0% 7.0% 5.0% 9.0%
Residential2 -5.0% 3.0% -5.0% -10.0%
Retail3 14.0% 27.0% 9.0% 11.0%
Industrial4 6.0% 20.0% 5.0% 10.0%
Colliers International 25Asia Real Estate 2013 Forecast I Taipei, Taiwan
Taipei, Taiwan
Officecapitalvalues increasedbyanestimated5.7%in2012notwithstandingthatrentsmovedgenerallysidewaysduringtheperiod.Thekeyreasonwasthatmostlocallifeinsurersdeterminedtoparktheircapitalinofficestockdespitethesustainedlowinvestmentyields.However,thecurrenttrendmightbereversedin2013.
Furthertothe increaseoftheminimumyieldsonreal-estate investments from1.875to2.125%inAugust2012,theFinancialSupervisoryCommission(FSC) increasedtherateto 2.875% in November 2012 in an attempt to curb short-term trading of commercialproperties.Shortlyaftertheannouncement,investmentsentimentforboththeofficeandindustrialsectorshasturnedcautious.Bothofficeand industrialpricesarepredictedtosoftenin2013sincemarketyieldsforofficesaregenerallyfetching2.5%.Moreimportantly,lifeinsurerswhousedtobethemainbuyersinthecommercialinvestmentmarketnowhavevirtuallydisappearedfromthemarket.
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 -0.5% 5.7% 1.0% -5.0%
Residential - - - -
Retail - - - -
Industrial2 2.1% 6.3% 1.0% -5.0%
1OfficereferstopremiumGradeandGradeAofficesinCBD
2Industrialreferstohi-specsbuildingsinNeihuTechnologyPark
NorthAsia
Colliers International 27Asia Real Estate 2013 Forecast I Tokyo, Japan Asia Real Estate 2013 Forecast I Seoul, South Korea
Seoul, South KoreaTokyo, Japan
Althoughthepaceofrentdeclinehasbeentaperingoffsince2008,themarketcontinuedtobechallengedbythecurrentsupplycycle–theyearwiththesecondlargestcompletionsince2003.However,duetothecompletionrateofnewdevelopmentsonaquarterlybasis,thecurrentsupplycyclesawitspeakin1Q2012.Rentscamedownandbottomedin3Q2012andstartedtorisein4Q2012afteranaccumulateddeclineofnearly40%sincetheglobalfinancialtsunamiin2008.In2013,officerentsareexpectedtoincreaseslightlyastherewillbelessnewsupplycomingontothemarket.Thevacancyrateisexpectedtoedgedownfrom8.5to7.8%in2013.Duetothestockavailability,itisourpredictionthattenantswillrelocatetohighergradeandbetterqualityofficedevelopments,thusleadingtoamildincreaseofrentandcapitalvaluesin2013.
TheindustrialmarketinTokyoispredictedtoremainstablein2013thankstothesteadyend-userdemandfromabatchoflocallogisticscompanies.Mostoftheleasingcontractsaresignedforatermof5to10years.Therefore,nodramaticchangesareexpectedintheoverallleasingmarket.Inthesalesmarket,moresalestransactionsareanticipatedsincetwoexistingJREITsandtwoothernewREITsarethereinthemarketplacetoexpandtheirportfoliosforlong-terminvestment.
Officerentsincreasedabout4%in2012thankstotheimprovementofoccupancyrates.Askingrentsfornewlycompleteddevelopmentswereraisedthankstotheupgradingdemandfromthefinancialservicessectorandanumberoflocalconglomerates(e.g.SamsungandDaelim).Asvendorsprovidelessincentive,effectiverentsandcapitalvaluesarepredictedtoincrease3to4%in2013.Onthesupplyfront,primeofficedevelopmentsaremadeavailable forsale-and-leasebackbyarangeofdomesticconglomerates forthepurposeofstrengtheningtheirbalancesheets.InvestmentfundsincludingNPS,KoreaTeachersMutualFundsandPoliceMutualFundsareexpectedtoremainthekeybuyersin2013.
Onthesupplyfront,urbanredevelopmentprojectsintheCBD-CheongjinDistrictNo.1,MyeongdongDistrictNo.3,DoryumDistrictNo.24andoneprimeofficebuilding,theFDIbuildingintheYBDwillcomeonstreamin2013,thusboostingthevacancyrateintheoverallofficemarketinSeoul.Domesticpensionandmutualfunds(e.g.NPS,KoreaTeachersMutualFunds)areexpectedtobethekeybuyersin2013.Inaddition,investmentactivitiesareexpectedtoremainupbeatsincemorequalitypropertieswillbeavailableforsale-and-leasebackbyarangeofdomesticconglomeratesforthepurposeofstrengtheningtheirbalancesheets.
Intheresidentialsector,rentgrowthisgoingtoberelativelysteadyontheorderof4%in2013.However,buyinginterestsareexpectedtoremainweaknotwithstandingthevariousstimuluspackagesimplementedbythegovernmenttomitigatenegativefactorssuchaseconomicuncertaintiesandthehighvolumeofnewsupplyandsoon.Mostend-userswouldthenresorttoleaseratherthantobuy.
Theindustrialsectorlooksgloomydespitetheprojectionofsteadily-risingrents.Mostprospectivebuyersaregenerallyscepticalabouttheprospectivegrowthduetotheweakprevailingdemandinthemanufacturingindustries.
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 3.9% 2.7% 4.0% 3.0%
Residential2 3.4% 0.2% 4.0% 1.0%
Retail - - - -
Industrial3 2.8% -6.5% 3.0% -5.0%
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 0.4% 1.2% 2.0% 0.3%
Residential - - - -
Retail - - - -
Industrial2 0.3% 0.2% 0.0% 0.0%
1OfficereferstoprimeofficesinSeoul
2ResidentialreferstoresidentialpropertiesinmajorareasinSeoul
3Industrialreferstosixmajorindustrialarea-Seongsu,Youngdeungpo,Namdong,Shihwa/Banwol,Pyeongtaek/Asan/Dangjin,BusanNoksan
1OfficereferstoGradeAdevelopmentsintheCBDareas
2Industrialreferstologisticswarehouses
Colliers International 29Asia Real Estate 2013 Forecast I Jakarta, Indonesia
Jakarta, Indonesia
1OfficereferstoprimeofficesintheCBD
2Residentialforleasereferstostockavailabletoexpatriates;Residentialforsalereferstostrata-titleunits
3Retailforleasereferstoshoppingmallswithatotalfloorareaof10,000sqmormore;Retailforsalereferstostrata-titleunits
4IndustrialreferstoindustrialestateslocatedingreaterJakartaincludingsub-marketslikeSerang,Tangerang,Bogor,BekasiandKarawang
Jakartasawverypositivegrowthofrealestatepricesacrosstheboardin2012.Theofficesectorstolethelimelightwith35and32%rentandcapitalgrowth,respectively.Thesametrendisexpectedtocontinuein2013thanksthebuoyantleasingdemandfromoverseascompaniesengagedinbankingandfinancialindustries.Withverylimitedstockforsale,officecapitalvaluescouldedgeupfurtherbutataslowerpacesincecapitalvalueshaveincreasedbymorethan60%overthepastcoupleofyears.Investmentyieldswouldsettleinarangebetween6and8%peryearin2013.
TheresidentialleasingmarketispopularamongmostexpatriatesbutitissmallinJakarta,representingonly7%ofthetotalstockinthemarket.However,rentgrowthisanticipatedtopickupadditionalmomentumtoabout6%in2013duetolimitedstockavailability.Inthesalesmarket,demandforstrata-titleunitshasbeengrowingsinceearly2012.Giventheongoingtrendandlimitedstockinthesub-marketsliketheCBDandSouthJakarta,pricescouldgoupby11%in2013.
Retailrentsforsizeableshoppingmallsincreased18%in2012.However,capitalvalueswereslowduetothefactthatmarketliquidityforstrata-titleretailunitshasbeenthinandprospectivegrowthhasbeensufferingfromalackofoverseasretailers.Assuch,prospectiveretailcapitalgrowthisgoingtobelimitedatlowsingledigitsin2013.
IndustrialrentsinJakartaincreasedsignificantlyby18%in2012althoughthatrepresentsasmallportionofthetotalindustrialtransactions.Thesalesmarketshowedremarkablegrowthwithpricesrisingby25%duringtheyear.Sinceindustrialistsshowincreasingresistancetothecurrentpricelevel,askingpricesareanticipatedtobereduced.Itisourpredictionthattheoverallindustrialcapitalvalueswillslowto11%in2013.
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 34.5% 31.6% 35.0% 20.7%
Residential2 3.2% 11.8% 5.5% 10.6%
Retail3 17.8% 2.1% 20.0% 3.2%
Industrial4 18.0% 24.5% 5.0% 10.5%
SoutheastAsia
Colliers International 31Asia Real Estate 2013 Forecast I Kuala Lumpur, Malaysia
Kuala Lumpur, Malaysia
1OfficereferstoGradeAofficebuildingsinKualaLumpur
2Residentialreferstoluxurycondominiumsandservicedresidences
3RetailrefersprincipallytoshoppingareasinKualaLumpur
4IndustrialrefersprincipallytotherentsofwarehousesandcapitalvaluesofthelandpricesinGreaterKualaLumpur.
WithastableeconomicoutlookexpectedinMalaysia,supportedbycontinuedstrongdomesticconsumptionandinvestment,KualaLumpurforeseesacautiousgrowthintheresidentialsectorwhileallotherrealestatesectorsmaymoderate. Intheofficesector,rentsandcapitalvaluesremainstableassupplycontinuestobeprojected into themarket (2.5millionsq ftofofficespace in2012andabout4-5millionsqftofofficespacein2013).Thesefutureofficedevelopmentsare,inmostcases,notpre-leasedandlandlordsarelookingfortenantstofillupthesespaces.Intheleasingsector,structuralchangesareseenbymajortenantstakingtheopportunitytorelocateand/orexpandtobetterqualitybuildingswithinthecity
centre.Maintenantsarefromtheoil&gasandfinancesectors. Theresidentialmarketsentiment inKualaLumpurhasbeenupbeatsince lastyearasresidentialpropertypricesandnewsupplyhasfurtherincreased.However,risingsupplyandweakdemandareexpectedtoputfurtherpressureonthecondominiumrentalmarket.Incontrast,thelandedresidentialsegmentcontinuestoshowstrongtake-uplevelsandremainsattractivetolocalinvestors. KualaLumpurfunctionsastheretailandfashionhubforMalaysiaandastourismplaysanimportantroleinKualaLumpur’sservice-driveneconomy,theretailmarketinKualaLumpurisperformingrelativelywell.Lookingforward,thefuturesupplyofretailcentresintheKlangValleyisexpectedtoincreaseby7.63millionsqftbetween2012and2014whichrepresentsanaverageannualincreaseof5-6%intotalnetlettablearea(NLA)ofshoppingmallsintheKlangValley.Retailrentsareexpectedtoremainstablewhilehealthygrowthof5%ormoreincapitalvalueisexpectedin2013. Mostoftheindustrialdevelopmentsareledbythepublicsector.Tohelpnewentrepreneursgetstarted,thegovernmentprovidesvarioustypesoffundingintheformofgrants,loansandincentivesforvariousindustrialsectors.Themostactiveindustrialsectorsarefromthelogisticsandsmallandmediumenterprises(SME)sectors.Withastableeconomicoutlook,theindustrialpropertymarketcouldpotentiallybenefitfromforeignfirms,especiallyfromSingapore,relocatingorsettinguptheiroperationsinwell-establishedindustrialparksthathavegoodinfrastructure,facilitiesandconnectivity.
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 0.0% 0.0% 0.0% 0.0%
Residential2 0.0% 0.0% 0.0% 0.0%
Retail3 5.0% 5.0% 0.0% 5.0%
Industrial4 7.5% 6.0% 5.0% 5.0%
Asia Real Estate 2013 Forecast I Karachi, Pakistan
Karachi, Pakistan
TheKarachiofficemarketcontinuestofacechallengingproblems,includingterrorismthathasnegativelyinfluencedthebuyinginterestoflocalandforeigninvestorsintheofficemarket.Withanexistingoversupplysituationinthemarketandnoactualnewdemandgeneratedfromlocalandforeigncompanies,rentsforgoodqualityofficebuildingsinKarachiareforecasttoriseslightlyatanaverageof2%in2013whereas,thecapitalvalueswill remain flat.Themajorityofthetenantstakingupspace inthesebuildingsareengagedin“FastMovingConsumerGoods”(FMCGs),theoilandgassectorandthetelecomindustry.
Supported by strong population growth and an intercitymigration trend, healthy
growth in the residential sector is expected in 2013. Nonetheless, due to the difficult economic conditions, the considerable drop inpurchasingpoweramonggenuinehomebuyers,therehasbeenashiftofdemandfromluxuryunitstothemoreaffordablehousingsector.Rentsarepredictedtorise5%whilecapitalvalueswilledgeup4%intheresidentialsectorofKarachiin2013.
RetailshoppingmalldevelopmentsinKarachiareperformingrelativelywellduetosolidconsumerspendingandashiftofthepopulation’spreferencetowardsone-stopshopping(i.e.malldevelopment).Goodqualitymallscateringtohigh-endforeignandlocalbrandshavebeenachievinganoccupancyrateofabove75%onaverage-aclearsignshowinghealthydemandfromforeignretailersinKarachi.Overallretailrentsarepredictedtoincrease10%andcapitalvalueswillgrow7%onaveragein2013.
1OfficereferstoprimeofficebuildingsinKarachi
2Residentialreferstothemassmarketandhigh-endresidentialunitsinKarachi
3RetailreferstomalldevelopmentsinKarachi
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 -0.5% 0.0% 2.0% 0.0%
Residential2 5.0 2.0% 5.0% 4.0%
Retail3 10.0% 0.0% 10.0% 7.0%
Industrial - - - -
Colliers International 33Asia Real Estate 2013 Forecast I Manila, Philippines
Manila, Philippines 2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 9.8% 9.5% 6.5% 4.2%
Residential2 11.0% 8.3% 9.5% 6.2%
Retail3 4.0% Flat 4.4% Flat
Industrial4 3.3% Flat 3.2% Flat
Withstrongdemandfromthebusinessprocessoutsourcing(“BPO”)sectorforprimeofficesintheCBDarea,officerentswillseeanincreaseby9.8%attheendofthisyear.In2013theofficerentsareexpectedtoslowto6.5%sinceabatchofnewsupplycomprisingoveronemillionsqmoffloorareawillbecomingtoMetroManilain2013and2014.DuetolimitedsupplyinMakatiCBD,therewillbeacontinuedshiftofleasingdemandtothefringeareassuchasBonifacioGlobalCity(“BGC”)wheremorestockisavailableatcheaperrents.Meanwhile,thesalesmarketisexpectedtobenefitfromthesustainedbuyinginterestsfrombothlocalandoverseascompanies.
Theresidentialmarketwillcontinuetolookstrongin2013duetotheanticipatedeconomicgrowthin2013andthesustainedoccupationaldemandfromexpatriates.However,prospectivegrowthofrentsandpricesareexpectedtoslowto9.5and6.2%,respectively,sincetherewillbe2,800newunitscomingontothemarket,representing12%growthYoY.
RetailsalesremainrobustduetothestrongconsumerspendingandtheincreasingpopulationinthePhilippines.BesidestheCBDs,moreshoppingmallsandsuperstoresarealsoexpectedinthesecondandthird-tiercities.Moreover,thestrip-mallconceptislikewiseagrowingtrend.Retailrentswillgenerallytrackwiththeeconomywithrentsgrowingbetween4and5%nextyear.
Industrialrentsareexpectedtostayrelativelyflatnextyear.Growthintheindustrialsegmentremainsrestrictedduetothehighelectricitycostsandweakglobaldemand.Moreover,electronicproducts,amajorsourceofPhilippineindustrialexports,haveperformedpassivelyoverthe last fewyears.Thus,theoutlookon industrialrents in2013 isthattheywill remainrelativelyneutral.However,an increaseinJapanesecompaniesscoutingfor industrialpropertieshasbeenobserved,whichmight indicatearelocationtrendbytheseforeigncompaniestothePhilippines.
1OfficereferstoprimeofficesintheCBD
2Residentialreferstothree-bedroomunitslocatedintheCBD
3RetailreferstoshoppingmallsandsuperstoreslocatedintheCBD
4Industrialreferstologisticswarehouses
Singapore
Asia Real Estate 2013 Forecast I Singapore
Weighed down by the sluggish global economy, Singapore’s economic growth isexpectedtoslowto1-3%in2013.Demandforofficespacefromthesentimentdrivenfinancialservicesindustryishenceexpectedtoremainundertheweightofeconomicuncertainties.Nonetheless,amorediverseoccupierdemand–thatextendsbeyondthefinancialservicessectorincludingbroad-basedservicesfirmssuchasthose in theprofessional and legal services industries, insuranceandcommoditysegments–isexpectedtoprovidesupporttothesector,thusmoderatingtherentdeclineto5%in2013.Overallcapitalvaluesofofficespacecouldholdstablewithonlymarginaldownsidesin2013onthebackofhealthyfundamentalsinthestrata-titledofficemarketgiventhe low interest rateenvironmentandcontinued limited
1Officereferstowhole-blockGradeAdevelopmentsforleaseandstrata-titledunitsforsales
2Residentialreferstoluxurynon-landedprivateresidentialproperties
3Retailreferstoground-floorretailspaceforleaseandstrata-titledunitsforsales
4AllindustrialrentalandpriceindicesrecordedbytheUrbanRedevelopmentAuthority
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 -7.0% -1.0% -5.0% 5.0%
Residential2 -4.0% -5.0% -10.0% -5.0%
Retail3 -3.0% 6.0% -5.0% 3.0%
Industrial4 10.0% 26.0% 5.0% Flat
supplyofprimestrata-titledofficespace.Recentanti-speculationmeasuresimposedintheresidentialandindustrialsectorswillcontinuetodivertsomeinvestmentcapitaltotheofficemarket.
Therecordlevelofhousingtransactionsandreaccelerationofpropertypricesfuelledbythepro-buyingenvironmentoflowinterestratesandexcessliquidityledtheGovernmenttointroducemorecoolingmeasuresinJanuary2013.Thisseventhroundofcoolingmeasuresiscalibratedtodampeninvestmentdemand,reininsoaringpricesanddiscouragebuyersfromoverextendingthemselves.Amongotherthings,theAdditionalBuyer’sStampDuty(ABSD)ratesforthepurchaseofresidentialpropertieswereraisedbetweenfiveandsevenpercentagepoints.Loan-to-Valuelimitsonhousingloansgrantedbyfinancialinstitutionswerealsoloweredforindividualswithatleastoneoutstandinghousingloan,aswellasfornon-individualborrowerssuchascompanies.Inaddition,theminimumcashdownpaymentforindividualsapplyingforasecondorsubsequenthomemortgageswasraisedfrom10to25%.Thepoolofpotentialbuyerswillshrinkassomewillbepricedoutduetothecurbs,whileotherswillstayonthesidetoassessthe impactonthemarketandtheirplannedinvestments.Foreignbuyers,whoformthemainbaseforthepurchasesofluxuryresidentialpropertiesinSingapore,willbeaffectedbytheincreasedABSDto15%.However,Singaporeremainsattractiveasitisstable,safefromnaturaldisasters,providesgoodprotectionofpropertyrights,andhaslittlecurrencyrisk.Hence,whilesomeforeignerscouldbedeterred,therewillstillbethosewhoviewthelatestmeasuresasanotherone-timetaxonpropertythattheyarewillingtopay.Overall,foreignparticipationisexpectedtoslidefromcurrentlevelsbutpricesofluxurynon-landedresidentialpropertiesareexpectedtoremainrelativelystablewithamarginallyslipof5%in2013.
In2013,consumersentimentcouldbeliftedbythelatestroundofQuantitativeEasing(QE3)bytheUnitedStatesFederalReserve.RetailsaleswillalsobeaugmentedbyhealthytouristarrivalsonthebackofnewandreinventedvisitorattractionsinSingapore.Yetdiscretionaryspendingbylocalresidentsmayslidegiventheweakeconomicoutlook.Also,despitetheretailsector’sexpectedresilience,retailersandF&Boperatorshaveto facethegrowingchallengesbroughtaboutby increasedcompetitionandoperationalchallengessuchasstaffshortages.Allofthesewillhaveabearingonthedemandforretailspace.Assuch,rentsofprimegroundfloorretailspaceintheOrchardRoaddistrictareforecasttoseesomedownwardpressuretothetuneofupto5%ascompetitionoftenantsbetweenmallsstiffensin2013.Thesalesmarketwilltelladifferentstory.Thesalesmomentumofstrata-titledretailspaceisexpectedtocontinuein2013.Capitalvaluesareprojectedtocontinuetotrendupwardsasinterestforexistingandnewstrata-titledretailspacefrominvestorsandend-usersareexpectedtoremainhealthy.
Colliers International 35
Theindustrialsectoristrulythestarperformerin2012,withrentsincreasingby10%andcapitalvaluessurgingby26%duringtheyear.Theunabatedgrowthinindustrialpropertypriceshasbeensupportedbyhealthybuyingactivityfromend-usersandinvestors.Therecentstrongrun-upinindustrialpropertypriceshaspromptedtheGovernmenttoimpose,witheffectfrom12January2013,aSeller’sStampDuty(SSD)onindustrialpropertiesthataresoldwithinthreeyearsofpurchase.Themeasureaimstodiscourageshort-termspeculativeactivityandrein in industrialpropertyprices.Unlikespeculators, it isexpectedthatend-usersandinvestorswitha longer investmenthorizonareunlikelytobeadverselyaffectedbytheSSDandwillcontinuetoprovidesomesupporttothestratasalesmarketwhichisalsoexpectedtocontinuetobenefitfromthelowinterestrateandhighliquidityenvironment.Nonetheless,buyersarestillexpectedtobecautiousandpricesensitiveduetoacombinationoffactorsincludingthelatestGovernmentmeasure,thepersistentglobaleconomicheadwindsandhighercompetitionfortenantsarisingfromrecentmovestoevictunauthorisedindustrialspaceusersandfromthespateofnewstrata-titledindustrialprojectssoldoverthepastfewyears.Inthelightoftheabove,theindustrialpropertymarketisexpectedtobemorestablein2013,withindustrialcapitalvaluesexpectedtoremainrelativelystablewithminimalfluctuationsin2013.Industrialrentsarealsoprojectedtoriseataslowerpace.
Asia Real Estate 2013 Forecast I Bangkok, Thailand
Bangkok, Thailand
1OfficereferstoGradeAofficebuildingslocatedintheCBD
2Residentialreferstothehigh-endsectorinthecity
3Retailrefersprincipallytoshoppingcentresinthecity
4Industrialreferstologisticwarehouses
SincetherewillbenoofficedevelopmentsscheduledforcompletionintheBangkokCBDduring2012and2013, thecurrentupward trend forboth rentsandcapitalvaluesisexpectedtobesustainedin2013.Officeinvestmentyieldswillbelargelysteadyintherangeoffrom5to7%in2013inanticipationofthecontinuedsupportofanumberoflocalend-usersandinvestors.
In the residential sector, prospective rent and capital growth will be slowed bytheplentifulsupplyofcompletedschemesnotwithstandingthatanumberofnewresidentialdevelopmentscurrentlyunderconstructionwillbedeferredbyagenerallack of construction workers. Real estate buyers comprising mainly locals will
continuetosupportthemarket,particularlytheprojectsalongthemasstransitlineinthecityarea.
Withageneralincreaseindomestichouseholdincomeandtheongoinggrowthofretailsales,retailrealestateinBangkokcontinuestolookpositivein2013.AnothergrowingtrendisthegradualcompletionofresidentialprojectsinthesuburbanlocationsofBangkok,thusunderpinningthedemandforshoppingandretailfacilitiesinthoseareas.
Industrialrealestaterentsandcapitalvalueswillbeedgingupsteadilyin2013butthesectorwillberelativelyquietintermsoftheleveloftransactionalactivityparticularlyinthecityareawhereexistingindustrialpremiseshavebeencompletedformorethan15years.Overseascompanies(e.g.JapaneseandEuropean)wouldrathergotothefringeareasofBangkoktosearchforindustrialsiteswithlandedareaontheorderof10,000sqmormore.
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 10.0% 8.5% 10.0% 8.0%
Residential2 10.0% 10.0% 5.0% 5.0%
Retail3 5.0% 5.0% 5.0% 5.0%
Industrial4 10.0% 7.0% 10.0% 7.0%
Asia Real Estate 2013 Forecast I Singapore
Colliers International 37Asia Real Estate 2013 Forecast I Ho Chi Minh City, Vietnam
Ho Chi Minh City, Vietnam
1OfficereferstoofficedevelopmentslocatedinDistrict1,2,3,4,5,7,10,11,TanBinh
2ResidentialreferstoresidentialdevelopmentslocatedinDistrict1,2,3,4,5,6,7,8,10,11,TanBinh,BinhThanh,BinhTan
3RetailreferstoretaildevelopmentslocatedinDistrict1,2,3,4,5,7,10,11,TanBinh
In theofficesector, rentsarepredicted toedgedownby6% in2013 inadditiontothe7%declinein2012.OfficesupplyinthecentralareasremainslimitedsincetheCBDinthecityissmall.Newprojectscomingonlineareprimarily locatedinthe fringe districts. However, completion of individual projects have either beendeferredorsuspendedsincedeveloperscontinuetofacethechallengeoffinancingtheircashflows.Althoughthegovernmenthasrelaxedinterestratecontrols,banksremainhesitanttolendtodevelopersotherthanthelargeandwell-establishedlocaldevelopers.AsianinvestorsfromJapan,KoreaandThailandinparticularhavebeenlookingatthisasdistressedopportunities.
Intheresidentialsector,therewillbeanincreaseinnewsupplyin2013,thusputtingsomedownwardpressureonrents.However,capitalvaluesremainontherisenotwithstandingtheprojectionthatthegrowthpacewillbetaperingoffto2%in2013.
Intheretailsector,newdevelopmentcomingonlineislimitedafterthelaunchofVincomCentreA,theprimeshoppingcentrelocatedinthecitycentre,andtwootherprojectsoutsidetheCBD.Rentaloffersinthebrandnewretaildevelopmentsintheoutskirtsatelliteareasarecompetitiveasvendorsaredeterminedtofilltheirdevelopments.Itisourviewthatretailrentsandcapitalvalueswilledgefurtherdownin2013beforeareboundby2014attheearliest.
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 -7.0% 0.0% -6.0% 1.0%
Residential2 -8.0% 7.0% -6.0% 2.0%
Retail3 -12.0% 3.0% -8.0% -4.0%
Industrial - - - -
Asia Real Estate 2013 Forecast I Hanoi, Vietnam
Hanoi, Vietnam
1OfficereferstoofficedevelopmentsinCBD(HoanKiem,HaiBaTrung,BaDinh)andsatelliteareasintheWest(CauGiay)
2ResidentialreferstoresidentialdevelopmentsinCBD(HoanKiem,HaiBaTrung,BaDinh)andsatelliteareasintheWest(CauGiay)
3RetailreferstoretaildevelopmentsinCBD(HoanKiem,HaiBaTrung,BaDinh)andsatelliteareasintheWest(CauGiay)
Intheofficesector,rentsremainfirmontheorderofUSD50persqmpermonth.However,theoverallrentlevelwillcontinuetobesuppressedbytheintroductionofmorenewdevelopmentsintheoutskirtareassuchasCauGiaydistrictinthewestwhererentsaresignificantlylowerthanthoseintheCBD.DevelopmentsrecentlycompletedincludeKeangnamHanoiLandmarkTowerandIndochinaPlazaHanoi.Officerentalsarepredictedtocomedownby17%in2013.Onthesalesfront,capitalvaluesaregoingtoedgedownby9%sinceinvestorsaregenerallychallengedbythedifficultyofgettingaccesstobankfinancing.
Intheresidentialsector,rentsareanticipatedtoremaininadownwardtrendin2013.Again,capitalvalueswillbedampenedbythelarge,new,luxurysupplycomingonlinein2013.
Intheretailsector,rentalperformancewillremainnegativein2013sincetherewillbeanincreaseofnewsupplyinthefringeareas.ThemostsuccessfuldevelopmentsarelocatedintheCBDwithTrangTienPlazashoppingmall-arenovateddevelopmentwhichisscheduledtocomeontothemarketin2013.
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 -6.0% 0.0% 17.0% -9.0%
Residential2 -9.0% 6.0% -9.0% -1.0%
Retail3 -10.0% 4.0% -10.0% -2.0%
Industrial - - - -
Colliers International 39
India&CentralAsia
Asia Real Estate 2013 Forecast I Bengaluru, India
Bengaluru, India
1OfficereferstoprimeofficesintheCBD
2Residentialreferstothehigh-endsector
Duetothesignificantcontraction intheoverallabsorptionrateandthecontinuedrelocationoftenantsfromtheCBDtodecentralisedareas,officerentsinBengalurudeclined3%in2012.Onthedemandfront, it isgoingtobedrivenbytheIT/ITessector.Newsupplywillbeessentiallyoffered for lease. Inanticipationofamorebalancedsituationbetweendemandandsupply inthecomingmonths,bothofficerentsandcapitalvaluesareexpectedtostaylargelyflatin2013.Prospectivebuyerswillbegenerallycautiousinmakingtheiroffers.
The high-end residential sector in Bengaluru has been performing well with anencouraging15%capitalgrowthin2012thankstothegrowingsizeofthepopulation
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 -3.0% 5.0% Flat Flat
Residential2 4.0% 15.0% Flat 8.0%
Retail - - - -
Industrial - - - -
andthemigrationofresidentsintotheurbancore.Thecurrenttightsupplysituationwillremainthereduetothedeferredcompletionsofanumberofnewprojects.Assuch,residentialpriceswillseefurthergrowthof8%in2013.Goingforward,thesupplylevelwillgraduallyincreasesincelocalbankshavesoftenedtheirstanceinofferingfinancingtodevelopers.
Colliers International 41Asia Real Estate 2013 Forecast I Chennai, India
Chennai, India
1OfficereferstoprimeofficesintheCBD
2Residentialreferstothehigh-endsector
OfficeleasingdemandinChennaishowedsignsofslowingdowninthesecondhalfof2012althoughtheoverallofficerentmanagedtoedgeupby1%throughouttheyear.Inviewoftheoverallslowdownineconomicgrowthandthesustainedtrendofcost-savingsinitiativesadoptedbymostoccupiers,officerentgrowthwillbecapped.Theexistingvacancyontheorderof20%andtheforthcomingnewsupplyestimatedtobeabout4millionsqftperyearareexpectedtosendofficerentsdownby2%in2013.
Given the fact that Chennai is the capital city of the Indian state, demand in theresidentialsectorremainedstrong.Althoughthegrowthpaceisexpectedtotaperoffto8%in2013,thesalesmarketofsmall-to-mediumsizeunitswillcontinuetobeunderpinnedbygenuineend-usersamongmiddle-incomehouseholds.
2012 2013
(% growth YoY) Rents Capital Values Rents Capital Values
Office1 1.0% 0.0% -2.0% -2.0%
Residential2 15.0% 21.0% Flat 8.0%
Retail - - - -
Industrial - - - -
Asia Real Estate 2013 Forecast I NCR, India
NCR, India
NCR=Delhi,NoidaandGuragon
1OfficereferstoprimeofficesintheCBD
2Residentialreferstothehigh-endsector
3Industrialreferstowarehouses,factoriesandofficesoflightindustries
AttributedtotheincreasingsupplyofofficedevelopmentsoutsidetheCBD,theaverageoffice rent in NCR fell 1% in 2012. With the on-going trend of tenants moving todecentralisedareas,vacancyinprimeofficesintheCBDwillincreasewhilerentswillfallfurtherby3%in2013.
Demand fundamentals in the residential sector remain healthy. However, with agenerallackofsupply,bothresidentialrentsandcapitalvaluesincreased21and24%,respectivelyin2012.Thegrowthmomentumisgoingtoslowin2013.
In the industrial sector, themarket outlook continues to look positive thanks to thedemandfromlightindustry(IT/ITes).TheGovernmentofIndiahasbeensupportiveinupgradingthelocalinfrastructuretotheinternationalstandards.Theongoingtrendisthatindustrialfacilitieshavebeendevelopedbyend-usersforself-occupationpurposes.
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 -1.0% 0.0% -3.0% Flat
Residential2 21.0% 24.0% 5.0% 12.0%
Retail - - - -
Industrial3 3.0% 5.0% 5.0% 5.0%
Colliers International 43Asia Real Estate 2013 Forecast I Mumbai, India
Mumbai, India
1OfficereferstoprimeofficesintheCBD
2Residentialreferstothehigh-endsector
In the office sector, leasing demand slowed considerably in 2012 with overallcontractionofrentsby4%.Inanattempttosavecosts,tenantshavebeenrelocatingoutoftheCBD,thusleavingmorevacantspaceinthecoreareas.Goingforward,bothrentsandcapitalvaluesarepredictedtofall3%in2013.
Intheresidentialsector,pricesarecurrentlyperceivedtobeatapeakasprospectivebuyersturncautious. Inadditiontothe9%capitalgrowth in2012, themarket isanticipatedtogosidewaysduetotheincreasinglevelofnewsupplyin2013.
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 -4.0% 0.0% -3.0% -3.0%
Residential2 1.0% 9.0% 0.0% 5.0%
Retail - - - -
Industrial - - - -
Asia Real Estate 2013 Forecast I Kazakhstan
Kazakhstan
1OfficereferstoClassA&BofficebuildingswithintheCBD
2Residentialreferstoallunitsinbusinessandpremiumclass
3Retailreferstoshoppingcentres
4Industrialreferstopremisesinindustrialzones
2012 2013
(% growth YoY) Rental Capital Values Rental Capital Values
Office1 0.0% 0.0% 0.0% 0.0%
Residential2 0.0% 5.0% 0.0% 5.0%
Retail3 10.0% 0.0% 10.0% 0.0%
Industrial4 0.0% 0.0% 0.0% 0.0%
Officerentsarelikelytocontinuestayingflatin2013thankswithgrowingdemandfromanumberoflocalcompaniesinfinanceandmining&resourcessectoraswellasfrominternationalcompaniesrepresentedinKazakhstan.Inthesalesmarket,therehasbeenbuyinginterestinofficepremiseswithsizesrangingfrom500to1,000sqm.Theseweremainlydetachedbuildingsnotdesignedspecificallyforofficeusebutlocatedwithintheprimeareasofthecity.TheaskingpricepersquaremetrewasintherangeofUSD1,600-3,000persqm. Theresidentialmarketremainedstablewhichwassupportedbypositivesocial-economicdevelopmenttrendsinKazakhstan.InJune2012,thegovernmentdevelopedanewstatemulti-purposeresidentialprogramme,“AffordableHousing2020”.Themaingoaloftheprogrammeistoprovideresidentswithaffordablehousing.Thisprogrammeaimstodevelop1millionsqmofrentalhousingby2014andincreaseconstructionvolumeupto10millionsqmby2012.Thesalespricesintheprimaryandsecondarymarketsareexpectedtoseeamoderategrowthof5%asmostprojectsin2008weresuspendedorputonhold.
Theretailmarket inKazakhstanhasbeenstayingonanupwardtrendformanyyears. Investorshavebeenencouragedbythesteadyongoingrentgrowthofabout10%peryear.Assumingthesuccessfulcompletionofallplanned,newretaildevelopments,supplywilllikelyincreaseby120%bysecondhalfof2016.
IndustrialrentsinKazakhstanremainedflatin2012withsupplyofqualitypremisesbeinglimited.Thegovernmenthasstartedattendingtotheseproblemsbyputtingmoreresourcesintoinfrastructureandcompaniesoutsourcingtheirlogisticsfunctionswillreceivesupportfromthegovernment.However,theindustrialmarketwillremainflatin2013untilafurtherimprovementofinfrastructureconnectivityinthecity.
Executive SponsorPiersBrunnerChiefExecutiveOfficer,[email protected]:+85228220727
AuthorSimonLoExecutiveDirectorResearch&Advisory,[email protected]:+85228220511
JessyChung AnalystResearch&Advisory,[email protected]:+85228220643
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