Asia Pacific overall investment turnover up 19% in Q2

Asia Pacific saw its overall investment turnover increase by 19 percent quarter-on-quarter to US$23.1 billion (S$31.4 billion) in Q2 2016, mainly driven by the completion of several large transactions, said CBRE.
This includes Qatar Investment Authority’s US$2.5 billion (S$3.4 billion) acquisition of Asia Square Tower 1 (pictured) in Singapore which is reported to be Asia Pacific’s biggest office transaction since 2001, showed CBRE Research’s preliminary Q2 2016 MarketView figures.
Across the region, strong investment activity was registered in China and Australia.
Offshore capital remained active in Australia as acquisitions by foreign investors, particularly those from China and Singapore. It rose 35 percent quarter-on-quarter to US$2 billion (S$2.7 billion). Investment volume in China, on the other hand, jumped 39 percent quarter-on-quarter as domestic investors enjoy cheap funding.
“The completion of several large transactions this quarter, in Singapore and Tokyo in particular, underlines the continued strong demand for prime core assets around the world, especially in the office sector, by institutional investors,” said Dr Henry Chin, Head of Research, CBRE Asia Pacific.
Excluding the noteworthy transactions, overall investment turnover for Q2 2016 was stable across the Asia Pacific region.
Over at the region’s office market, leasing demand remained subdued, with net absorption increasing by just five percent quarter-on-quarter, despite corporate sentiment steadying.
“Flight-to-value dominated office leasing activity in Q2 2016 as occupiers in weak markets, such as Hanoi, Ho Chi Minh City, Perth, Singapore and Seoul, took advantage of cheaper rents by relocating to better locations or better office space in decentralized areas,” said Dr Chin, noting that cost savings is still the main driver for consolidation and relocations, especially among multinationals.
In the retail front, CBRE expects consumer sentiment to remain under pressure in Q2 and to weaken further amid the volatility in the financial markets, uncertainty in the global economy and bleak employment outlook.
“Despite slight improvement in leasing sentiment in China, retailers showed caution towards new openings and continued to consolidate store networks,” said Dr Chin.
Some international retailers in Hong Kong, for instance, are leveraging on lower rents to relocate to better locations or for cost-savings.
Nonetheless, there are some markets which registered positive retail performances such as India.
Dr Chin noted that the newly relaxed FDI policy helped boost retailer confidence in India this quarter, with the sector expected to witness increased activity with the entry of new single brand retailers as well as the expansion plans of existing players, primarily in the F&B sector.
“In Vietnam, CBDs are also showing stable activity thanks to interest from overseas retailers,” he added.
Over at the logistic and industrial sector, leasing demand for warehousing space was mixed as the trade and manufacturing slowdown in the region trickled into the warehousing sector.
“Q2 2016 saw the logistics sector continue to be driven by 3PLs and e-commerce firms on the back of online retail growth; demand remained resilient in China, India and Korea. In Japan, even though vacancy continued to rise, net absorption stood at a record high, implying stable demand in this market,” said Dr Chin.

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