Three reasons Asian real estate should continue to attract investors, despite the global slowdown
- Retail real estate transactions are down globally due to e-commerce, the trade war and Hong Kong’s protests
- Nevertheless, Asian real estate remains a good investment, especially logistics, Australia’s housing market and decentralised office districts
Yet, in mainland China, retail transaction volumes actually rose in the first nine months of this year, with investment in Tier 1 cities reaching a record of nearly US$7 billion.
This is just one example of the outperformance of the Asia-Pacific region’s property markets in the face of a slowdown in commercial investment and leasing activity globally.
In a report published last month, property adviser JLL noted that commercial transactions across the region rose to US$128 billion in the first three quarters of the year, an all-time high and a 10 per cent increase year on year, compared with a 13 per cent fall in deals across Europe, which limited the growth in global investment volumes to just 1 per cent.
To be sure, Asia’s occupier markets are not as buoyant as they once were. The fallout from the trade war has contributed to a marked decrease in office leasing volumes amid a surge in supply led by China, with completions of new Grade A buildings last quarter rising to nearly 18 million square feet, the highest quarterly figure on record, according to CBRE, another adviser. This is putting downward pressure on the region’s rents.
Moreover, leasing activity in the retail sector has suffered as consumer confidence in Asia has taken a knock, causing rents and capital values to fall last quarter, data from CBRE shows.