Being the traditional choice of APAC, Japan and Australia reaped so much real estate benefits. But due to lack of prime assets, a subtle change took place in the first half of 2016 making Singapore and Hong Kong the new safe havens of said investors, according to Knight Frank’s latest Asia Pacific Capital Markets report.
The three biggest real estate investments this year flowed in Singapore and Hong Kong. Meanwhile, Japan and Australia have experienced a yearly decline in commercial property transactions.
The most notable and the largest deal in Asia-Pacific is the acquisition of Asia Tower 1 in Singapore by Qatar Investment Authority from Blackrock. This transaction has a worth of USD$2.5 billion. The second and third largest property investments were in Hong Kong. Evergrand acquired Chinese Estates’ interest and leaseback in Mass and Mutual Tower for USD$1.6 billion and China Everbright bought Dah Sing Financial Centre for USD$1.3 billion.
Japan suffers from a shortage of prime office stock in Tokyo’s CBD. This resulted to investors focusing on secondary market. Bank of Japan’s (BOJ) implementation of negative interest rates to counter the appreciation of Yen has failed and this added up to the challenge. Because of this, properties from Japan became more expensive for offshore investors.
Australia’s recent large deals such as acquisition of 75% interest in 420 George Street by Investa Property (ICPF) for USD $340 million and Charter Hall’s purchase of the Macquarie Bank Building at 1 Shelley Street for USD $379 million showed continued demand for prime assets. Secondary and suburban assets became more likely to be considered.
An overall slowdown can be noticed in the category of residential sales. Home prices in Singapore have weakened for the 11th straight quarter while private home prices in Hong Kong have dropped by 11% since September 2015. Amid these issues, both cities remain the most expensive cities in the world to live in and are eyed as the new safe havens of investors.