Singapore and Hong Kong are the new safe havens of APAC, says Knight Frank
Singapore and Hong Kong are the new safe havens of APAC, says Knight Frank
A lack of prime assets in Japan and Australia means investors are turning to Singapore and Hong Kong in 2016
While property investors in APAC have traditionally planted the most money in Japan and Australia, a dearth of prime assets has prompted a subtle change in the first half of 2016, according to Knight Frank’s latest Asia Pacific Capital Markets Report.
Both Singapore and Hong Kong have become the alternative safe havens, accounting for the three largest investments this year, while Japan and Australia have experienced a year on year decline in commercial real estate transactions.
The acquisition of Asia Square Tower 1 in Singapore by Qatar Investment Authority for USD$2.5 billion from Blackrock is the largest deal in Asia Pacific for this year. The second and third largest deals were in Hong Kong, with the sale-and-leaseback of Chinese Estates’ interest in the Mass Mutual Tower to Evergrande for US$1.6 billion, and Dah Sing Financial Centre which was bought by China Everbright for USD$1.3 billion.
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In Japan, a shortage of prime office stock on the market in Tokyo’s CBD has caused investors to focus on secondary markets. Additionally, the Bank of Japan’s (BOJ) introduction of negative interest rates has failed to halt the appreciation of the Yen, making Japan properties more expensive to acquire for offshore investors.
In Australia, large acquisitions include Investa Property’s (ICPF) purchase of 75% interest in 420 George Street for USD $340 million, and Charter Hall’s acquisition of the Macquarie Bank Building at 1 Shelley Street for USD $379 million, both in Sydney’s CBD, demonstrate the continued demand for core, prime assets. The reduction in available assets for purchase, however, means secondary and suburban assets are more likely to be considered.
While commercial real estate in Hong Kong and Singapore is thriving, there is an overall slowdown on the residential side. Home prices in Hong Kong have dropped by 11% since a peak in September, and in Singapore, private home prices have weakened for the 11th straight quarter. Despite this, both cities rank at the top of the list in terms of the most expensive cities in the world to live in.
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Source: Property Report