Welcome to the first edition of Asia Market Intel magazine.
This inaugural issue explores a variety of trends and hot topics in the Asia industrial and logistics market, with CBRE experts providing market leading insights to ensure our clients are at the forefront of the sector.
Subjects include Industry 4.0 and last mile logistics. We also profile the latest edition of the Asia Pacific Industrial Occupier Guide and bring you up-to-date market news and trends from our national experts in their respective markets across Asia.
Thank you for your support and we hope you enjoy this first edition of Asia Market Intel magazine.
Welcome to the 2017 edition of the CBRE Valuations & Advisory Services Research Review, a joint publication by CBRE’s Valuations & Advisory Services and Research teams in Asia Pacific.
This new report series aims to capture the key trends and forces that are accelerating the pace of change in the commercial real estate sector; change which is transforming the way in which we value property and is reshaping the value proposition of different asset classes.
This edition includes summaries of CBRE Research’s China Investment Strategy 2020; The Evolution of Co-working; Investing in Emerging Occupier Trends; and How Active are Retailers in Asia Pacific? reports, together with additional content assessing what these trends mean for valuations across the region.
We thank you for your ongoing support and hope you enjoy this edition of the CBRE Valuations & Advisory Services Research Review.
Global Gateway Cities reports on office and retail investment trends in 24 global gateway cities, giving investors a comprehensive overview of pricing and market conditions. Using a mix of proprietary and key external data, CBRE Research provides an analysis of investment activity as well as economic, occupier, supply, rent and yield trends in the third edition of this report series.
Leasing momentum continued to improve in Q3 2017. The improvement was largely due to resilient demand from technology and domestic financial firms. Regional rental growth registered 0.9% q-o-q. Singapore (+1.7% q-o-q) recorded rental growth for the first time in two years.
Most retailers in Asia Pacific remained cautious in Q3 2017, despite Hong Kong, China and Singapore all recording a gradual improvement in retail sales. Overall leasing demand continued to be led by F&B retailers along with the sporting goods and cosmetics categories.Rents were flat, edging up by just 0.1% q-o-q despite robust growth in Sydney (2.8% q-o-q).
Leasing activity was mainly driven by relocations, together with consolidation and expansion in selected markets. Demand was led by e-commerce and 3PL firms. Overall logistics rents edged up by 0.6% q-o-q, driven by strong rental growth in Tokyo Bay Area (+3.9% q-o-q). Rents elsewhere were flat.
Transaction volume rose to around US$31 billion in Q3 2017, an increase of 2.0% q-o-q, thanks to robust activity from domestic investors in China and Singapore. Activity in Australia was weaker than expected amid a lack of deals due to the lack of institutional stock.
Welcome to the H1 2017 CBRE Advisory & Transaction Services Research Review, a joint publication by CBRE’s Advisory & Transaction Services and Research teams in Asia Pacific.
This edition includes articles on occupier trends in the legal sector; retailer strategy and expansion in Asia Pacific; the rise of co-working in Singapore; and the transformation of logistics facilities in Japan.
It also includes a recap of CBRE Research’s Seoul Office Market Tenant Survey, now in its fifth year.
We thank you for your ongoing support and hope you enjoy this edition of the CBRE Advisory & Transaction Services Research Review.
The Asia Pacific Industrial Occupier Guide helps occupiers navigate around the differences between the various leasing practices in Asia Pacific. It includes profiles of countries across the region as well as an analysis of standard leasing attributes and protocols such as:
•Typical lease length
•Space measurement standards
•Occupancy cost analysis
•Sales and purchase terms
•Market and other lease provisions
•Websites and contact information within CBRE for additional market information
•Easy access to summary analysis by country for comparison purposes
The Industrial Occupier Guide draws upon the knowledge of CBRE professionals across the region who possess detailed knowledge of the leasing practices in their respective markets.
Please contact us if we can assist in any way. We welcome suggestions for improvements to future editions of this Guide.
Data centres are becoming as important a part of business operations as office, retail and industrial assets. This trend is being driven by several factors including the increasingly digital world, IT development and the importance enterprise IT strategy plays in business delivery.
How data centre operators and cloud service providers position themselves now will determine their competitive status in the medium to long term. Asia is significantly different to the U.S. and EU, meaning that formulating the right strategy based on reliable intelligence and advice will be critical for service providers and end users.
The Internet of Things (IoT) and Industry 4.0 are likely to fuel incremental data centre demand, given the intensity of their data and computing needs. The importance of manufacturing to many Asian economies means that the adoption of the most advanced production methods will be a priority for many countries.
This report by CBRE Research explains why Asia Pacific is set to become the most important data centre regional market in the medium term. However, there remain pitfalls for the unwary and significant challenges for global multinationals in a culturally diverse and swiftly changing landscape.
Aggregate colocation supply across the four major APAC markets (Hong Kong, Singapore, Sydney, Tokyo) totalled 865MW as at H1 2017. Singapore with 304MW in total supply, is the largest market constituting slightly more than one-third of total APAC supply. This is followed by Hong Kong, Tokyo and Sydney which each accounted for 26%, 22% and 17% of total supply respectively.
Market growth over the last 12 months has been considerable, with total IT capacity having grown by 17.6% as compared to a year ago. This has led occupancy to remain relatively flattish as the market comes to terms with this supply influx. H1 2017 however saw some respite supply wise, with very few notable new developments completed in the quarter. On the demand end, robust take-up in the Singapore and Sydney markets underpin APAC net absorption of 47.1 MW for the first half of 2017 which helped occupancy to edge upwards.
Take up is being driven by the hyperscale cloud sector, particularly from US based companies. Hyperscale demand has seen a significant increase in individual requirement sizes with requirement quantum of more than 5 Megawatts not uncommon. This helped maintain occupancy levels as a fewer number of transactions are required to fill existing shell or unfitted data centre space. The growth of hyperscale data centres is likely to continue, driven by major trends such as big data, internet of things and video and game streaming.
Welcome to the H1 2017 CBRE Research Review in the Pacific. This semi-annual publication connects you with an executive summary of research from CBRE’s Australia, New Zealand and Global research including website links to full reports.
CBRE’s 2017 Asia Pacific Real Estate Market Outlook - Opportunities in the New Normal – identifies and explains the key themes set to shape the regional property market over the coming year. Investors with a stronger appetite for risk are expected to seek opportunities outside gateway cities in locations offering attractive pricing.
CBRE Vietnam Market Outlook will highlight the performance and trends of the real estate industry of Vietnam in the recent years to predict what is coming next.
On the back of solid economic fundamentals, Vietnam’s gold, oil and stock prices picked up and its real estate market remained buoyant despite instability in international economies.Leasing activities continue to gain momentum. Rent growth and occupancy levels witnessed sustained improvements across all property types. Vietnam’s condominium sectorcontinued the strong momentum seen in 2015 and reported positive figures in 2016, although there have been growing concerns about oversupply. The gravitation of big-name developers towards the lower-end segments is expected to hold up market sentiment and bring balance to the condominium sector of this lower middle-income country.
For property investment, the residential sector will continue to attract developers and investors as fundamentals still look positive. However, income producing assets, especially Offices and Hotels will draw particular attention, following several high-profile transactions in 2016.
Globalisation has driven an increasing geographic division between consumption and production. Factories have become more specialised and separated from the warehousing and retail stages of the supply chain. This fragmentation has resulted in a greater importance of supply chain considerations on locational decisions.
Transport costs are typically a large share of an industrial operation’s cost base, whereas rental costs are comparatively minor (figure 1). Industrial occupiers can often make transport related savings by locating themselves nearer to key infrastructure. Many occupiers will pay a rental premium for more savings elsewhere in their supply chain.
Investors are displaying a growing interest in data centres as a new asset class for real estate investment. With yields falling for almost all real estate asset types in Japan, relatively high yields are one of it’s attractions.
The number of new data centres in Japan has been stagnating and there is a growing sense that there is a shortage of data centres. In addition, recent surveys indicate that real demand for data centres will continue to expand.
There are three key criteria when choosing the location for a data centre: (1) power supply availability, (2) network quality, and (3) minimising natural disaster risk. More specifically, a site well suited to data centre would: have the availability of super-high voltage of at least 60,000V; be within a 50km radius of city central; and be in a region with low natural disaster risk. In Japan, the considerable time taken to secure power supply is a bottleneck to establishing sites for data centre use.
Industrial rents in Sydney have been consistently higher than in Melbourne. In 2012, Sydney super prime net effective rents (NER) attracted a 40% premium compared to Melbourne; today it is closer to 90% (figure 1).
Strong growth of industrial supply over the past five years in Melbourne outstripped demand, having a moderating impact on rents and causing incentives to grow from 7.5% in 2012 to 25% in 2017. At the same time, Sydney saw constrained supply, particularly in inner city areas as well as withdrawals of industrial stock for residential conversion. This has placed upward pressure on rents.
With this rent spread increasing, Melbourne looks more attractive from an industrial occupier perspective. However, there has been no shortage of occupiers willing to pay Sydney rents.
The overall condominium market in Q3 2017 remained generally slow; however, the downtown area performed well due to healthy demand while the midtown/suburban market still faced challenges.
Buyers in the downtown market remained selective and cautious which slowed down the overall sales rate resulting in a mixed sales performance. Only projects that are in good or new locations with the right pricing that matched the demand in the area did better than the average. However, we are not worried about having an oversupply in the downtown area. As of Q3 2017, there were 30,480 under construction units and 77.2% of this future supply has already been sold and there is limited built-but-unsold inventory.
In this quarter, three super luxury projects were launched, two of which are leasehold projects developed by Siam Sindhorn: Sindhorn Tonson (59 units) and Sindhorn Langsuan (20 units). The two projects have an average asking price of THB 300,000 and THB 330,000 per square metre, respectively, for a 30-year lease. The only freehold super luxury project launched was Banyan Tree Residences Riverside Bangkok (133 units), developed by Nirvana Daii PCL.