1
Asia Pacific Capital Markets in Focus
Deal pipeline building for remainder of the year April 2016
Highlights/
Outlook
Market
Conditions
Market
Fundamentals
Macro
Environment
Fast Facts -5%
Asia Pacific Commercial Real Estate Investment Volumes
Q1 2016
Total Transactions (US$ bn)
• Q1 AP investment volumes declined 5% y-o-y to USD 23.7bn, with Japan down and China stable.
Australia and Korea were outperformers; Hong Kong performed well against a low base in Q1 2015.
• Cross-border investors remained active and accounted for 22% of total volumes.
• Intra-regional capital flow within AP was almost four times higher than inter-regional capital flow
as investors look for opportunities and growth prospects within the region.
Office | Financial and technology firms continued to drive leasing activity.
Retail | Demand coming from mass market brands and F&B operators.
Industrial | 3PLs & e-commerce supports rents.
Residential | Small price falls in Hong Kong and Singapore and slower price growth in Australia.
Polarised market conditions between Tier 1 and Tier 2 Chinese cities.
Hotel | Diverse trading performance. Strongest showing in Tokyo and Australia.
• China is the only major country to be upgraded by the IMF in its World Economic Outlook.
Forecast global growth for 2016 is cut by 0.2 percentage points due to financial market risks.
• Low interest rates projected for most AP countries this year despite the gradual US monetary
policy normalisation. Japan’s rates can potentially move further into negative territory.
Key Contacts
Asia Pacific | Stuart Crow | +65 6494 3888
AP Research | Megan Walters | +65 6494 3649
Tokyo | Akihiko Mizuno | +81 3 5501 9947
Sydney | Simon Storry | +61 2 9220 8439
Melbourne | Robert Anderson | +61 3 9672 6588
Beijing | Kevin Qin | +86 10 5922 1191
Shanghai | Johnny Shao | +86 21 6133 5807
Hong Kong | Joseph Tsang | +852 2846 5231
Singapore | Greg Hyland | +65 6494 3876
Seoul | Steven Craig | +822 3704 8806
Delhi & Mumbai | Shobhit Agarwal | +91 22 2482 8488
Auckland | Nick Hargreaves | +64 9 914 9761
Asia Pacific Capital Markets in Focus | Q1 2016 Report prepared by Dr Megan Walters and Myles Huang
Stuart Crow
24
Q1 2016 vs. Q1 2015
Change
• Transaction volumes off slightly in Japan due to uncertainty after the introduction of negative
interest rates - however rising activity pipeline.
• Deal availability has increased with hotel and logistics deals in the market.
• Pipeline of larger assets coming through in several markets.
• Local capital appears to be active in most major markets.
2
Asia Pacific | Investment Deal Highlights
SBF Centre strata units
LaSalle Logiport REIT
8 assets (IPO)
Dah Sing Financial
Centre
Jongno Tower
SYDNEY
MELBOURNE
SINGAPORE
MUMBAI
SEOUL
HONG KONG
BEIJING
SHANGHAI
TOKYO
Waterfront Place
Block E & G
Woolworths
Headquarters
Asia Pacific Capital Markets in Focus | Q1 2016
Seller Far East Organisation
Buyer Scor Reinsurance
SGD 85m (USD 61m)
Seller Samsung Life and
Youngbo Buyer Alpha
Investment Partners
KRW 384bn (USD 320m)
Seller ARA
Buyer Pramerica Real
Estate Investors
RMB 760m (USD 115m)
Seller Sea Group
Buyer China Everbright
Holdings Company Ltd
HKD 10bn (USD 1.29bn)
Seller Mirvac Group
Buyer Inmark Asset
Management
AUD 336m (USD 243m)
Total value
JPY 160bn (USD 1.4bn)
PERTH
Syswin Building
Seller Syswin Group
Buyer Rail Capital
RMB 630m (USD 96m)
Building 10 (658 Church
Street)
Seller Frasers Property Group
Buyer Blackrock Asset
Management
AUD 46m (USD 33m)
Equinox Business Park
Seller Essar Group
Buyer RMZ Corp – QIA JV
INR 24bn (USD 355m)
DELHI
Exchange Tower
Seller Vicinity Centres
Buyer Primewest
AUD 110m (USD 79m)
Tokyo
Akihiko Mizuno
Outlook
Market
Conditions
Market
Fundamentals
Macro
Environment
• Steady demand from both domestic and
international investors, however deal flow
has fallen due to fewer large transactions
and more refinancing activity.
• Tokyo ranked for a 3rd year as the number
one market of choice in AP for investors
(ULI).
• Limited deal availability but fund
terminations expected in 2016 will support
transaction volumes.
• Negative interest rates will stimulate more
debt and equity investment across the
spectrum as investors seek high yield
assets.
• Investment volumes were down 26% y-o-y in
Q1 2016 due to a number of deals being
pulled from the market to be refinanced.
• Cross-border transaction volumes totaled
US$ 3.2bn. Interestingly, cross-border
investor were net sellers of real-estate, by a
factor of two to one.
• J-REITs remain active. LaSalle completed
an IPO of 8 logistics assets with a value of
117 billion yen (c. US$ 1.0bn).
• Cap rates have continued to shift lower in
line with cheaper funding costs. Sellers are
holding firm on their price expectations for
the time being.
Office | Rent growth remains above trend with
limited spare capacity in the leasing market.
Retail | Affordable luxury brands and service-based
retailers looking for space in prime locations.
Industrial | 3PLs (including retailers and
manufacturers) and e-commerce firms continued to
expand.
Residential | Average price of a condominium rose
9.3% in 2015 to the highest price level since 1991.
Hotel | Growing inbound tourism (19.7 million
visitors in 2015) is buoying the occupancy rates and
strong RevPAR growth in Tokyo and Osaka.
• Oxford Economics forecasts 2016 GDP
growth of 0.8% (0.5% in 2015) on slow
domestic and external demand.
• Japan's parliament approved a record
budget of US$ 851.5bn for fiscal 2016.
• Stable headline CPI due to the fall in energy
prices. CPI excluding fresh food and energy
however was up 0.8% y-o-y in February.
• The BoJ applied negative interest rates on
banks’ excess reserves starting February in
order to stave off deflation concerns.
• The Yen climbed to 110 against the dollar in
April, the strongest level since 2014.
Notable
Transactions
• Deal flow is limited as vendors prefer to pursue refinancing
/ availability of cheap debt
• The prices of condominiums trail behind top global cities
• Stronger investors’ appetites in hotels but owners may
choose to hold assets to benefit from improving cash-flow
3
Fast Facts
2.6-3.0 2.6-3.2 4.2-5.3
Transactional Yield Ranges (%) Japan Commercial Real Estate Investment Volumes
Grade A Office Retail Industrial Q1 2016 Total Transactions
(US$ bn)
Japan Market Statistics 6-12 Month Outlook
-0.07 10-yr JGB bond yield (% p.a.),
1Q16
Deal availability No. of foreign buyers Cap rate trend
Tokyo Office (CBD)
Source: JLL (REIS)
9.6
LaSalle Logiport REIT 8 assets portfolio (IPO)
Industrial | Total value USD 1.4bn
Nikko Building | Office | USD 119m | Net Yield 3.4%
Seller SPC of Deutsche Bank | Buyer Daiwa Office
Investment Corporation
Kyobashi Square | Office | USD 104m | Net Yield 3.0%
Seller SPC of AXA Investment Managers and Sumitomo
Mitsui Trust Realty | Buyer Kintetsu Real Estate
Chiba Port Square| Mixed use | USD 87m
Seller SPC of Oxley Holdings | Buyer Greenland/Laox
Asia Pacific Capital Markets in Focus | Q1 2016 Sources: JLL, Japan Government
No.10
Rent and capital value growth
-26% Q1 2016 vs. Q1 2015
Change
Tokyo’s Asia Pacific ranking
Real estate investment relative to size
Sydney
Simon Storry
• Finance market volatility has driven superfunds and
insurers to target securely leased investments in offices
• Demand for Sydney retail assets remains robust, but
stock availability has reduced
• Several major core logistics assets will come to market
5.0-6.5 4.5-7.25 6.25-7.5
Australia Commercial Real Estate Investment Volumes
Office Retail
Australia Market Statistics 6-12 Month Outlook
Deal availability No. of foreign buyers
4
• Offshore core investors should continue
to be attracted due to good quality assets,
and yield spreads to other core markets.
• Solid pipeline of major transactions for
H1 2016, with both individual asset
offerings and portfolios coming to market.
• Strong demand for office assets
reflecting investor confidence in the
leasing market. Softening demand for
secondary non-core retail assets.
• Prime yields should remain stable in
2016 across the commercial market, due
to low inflation and low nominal interest
rates.
• Investment activity in Australia was up 44%
y-o-y (AUD terms) for Q1, buoyed by strong
demand from wholesale and superannuation
funds as well as offshore buyers.
• Strong office investment activity as investors
competed for core assets. Several large
industrial transactions are due to settle in Q2.
• The most active Asia Pacific investor groups
in the market come from Singapore, Korea,
China and Hong Kong.
• Office and industrial yields were stable (retail
yield compressed slightly) in Q1, as recent
transaction evidence was reflected in current
yield levels.
Office | Sydney is at the forefront of the leasing
market recovery. Employment growth and positive
business conditions are driving tenant demand.
Retail | International retailers continued to expand.
Sydney is expected to lead the rental recovery.
Industrial | Strong activity in the new build market.
Stable rents in prime space.
Residential | Prices have fallen q-o-q in some
suburbs and sales volumes have continued to trend
down, due to a strong supply pipeline out to 2018.
Hotel | Rising occupancy levels and room rates.
Growing demand from various segments including
corporate, cruise and inbound.
• Consensus Economics forecasts slightly
stronger GDP growth (2.6% & 2.9%) over
2016-2017.
• The Reserve Bank restated in its 1 March
meeting that low inflation may provide
scope for further monetary easing.
• The AUD has strengthened to a nine-month
high of US$0.76 in March. The RBA is
concerned that a rising exchange rate could
slow the rebalancing of the economy.
• Retail spending growth remains reasonably
solid. Retail turnover in New South Wales
grew by 4.6% y-o-y in February.
Industrial
Woolworths Limited National Headquarters
Office | USD 243m | Seller Mirvac Group
Buyer Inmark Asset Management
151 Castlereagh Street | Office | USD 87m
Seller 151 Property Group (Blackstone) | Buyer
Deutsche Asset Management
M4 Greystanes Industrial Park | Industrial
USD 55m | Seller Deka Immobilien Investment | Buyer
Ascendas Logistics Trust 2
Sydney Office (CBD)
Source: JLL (REIS)
Outlook
Market
Conditions
Market
Fundamentals
Macro
Environment
Notable
Transactions
Fast Facts
Rent and capital value growth
-50
Sources: JLL, Reserve Bank of Australia
Transactional Yield Ranges (%)
2.0 Cash rate (% p.a.), 1Q16 Cap rate trend
Q1 2016 Total Transactions
(US$ bn)
+32% 3.3 Q1 2016 vs. Q1 2015
Change
Monetary easing
since 4Q14 (bps) Asia Pacific Capital Markets in Focus | Q1 2016
No.1 Sydney’s Asia Pacific ranking
Real estate investment relative to size
Melbourne
Robert Anderson
• An active market provides institutions an opportunity to
review their portfolio of office assets
• More sales and leaseback in industrial. Corporates are
taking advantage of the strong market conditions to put
the capital back into their businesses
5.25-7.5 4.75-7.5
Australia Commercial Real Estate Investment Volumes
Office Retail
Australia Market Statistics 6-12 Month Outlook
Deal availability No. of foreign buyers Cap rate trend
5
• Transactional activity over the coming
quarters to involve large non core office
assets, small portfolios of core plus
industrial assets, as well as sale and
leaseback corporate activity in industrial.
• Vendors will have the potential to
capitalise on strong pricing from
investment mandates.
• A number of sales in the pipeline are
expected to continue to confirm the current
yield range.
• Capital growth in 2016-2017 is projected to
be comparatively minimal.
• International investors are actively buying.
Blackrock secured a fully occupied office
building in order to benefit from the
improving leasing market expected over
the next few years.
• Available assets in the market include A-
grade city fringe office assets, core plus
industrial assets, bulky good stores.
• A number of investors have brought their
industrial assets to the market following
the GIC and Frasers Property portfolio
transaction in H2 2015.
• Yields were generally stable in Q1.
Office | Expansion by public administration and
finance companies helped to offset downsizing by
mining and resources companies.
Retail | New international retailers continued to
grow their store network in Melbourne.
Industrial | Demand was led by the retail trade
sector.
Residential | Large level of recent stock completion
and a solid supply pipeline with a peak expected
over 2017-2018 period.
Hotel | RevPAR growth to continue in the next few
years but the supply pipeline is growing.
• The Victorian economy grew by 4.6% over
the year to Dec 2015, the strongest annual
increase of any state.
• Retail turnover in Victoria increased by
4.8% y-o-y in February, and continued to
track above the national average (3.3%).
• Slower price and rent growth for
apartments in inner city precincts.
• There has been a notable shift from the
construction of larger residential towers
located across inner Melbourne to lower
density smaller developments in
Melbourne’s fringe markets.
Industrial
Oxford Cold Storage Portfolio | Industrial
USD 152m | Seller AB Oxford
Buyer Logos Property
Building 10 (658 Church Street) | Office
USD 33m | Seller Frasers Property Group
Buyer Blackrock Asset Management
Melbourne Office (CBD)
Source: JLL (REIS)
Outlook
Market
Conditions
Market
Fundamentals
Macro
Environment
Notable
Transactions
Fast Facts
Sources: JLL, Australia Government
Transactional Yield Ranges (%)
Q1 2016 Total Transactions
(US$ bn) Q1 2016 vs. Q1 2015
Change
6.25-7.5
Asia Pacific Capital Markets in Focus | Q1 2016
No.3 Melbourne’s Asia Pacific ranking
Real estate investment relative to size
2.57 10-yr AGS bond yield (% p.a.),
1Q16
Rent and capital value growth
+32% 3.3
Hong Kong
Joseph Tsang
• Office sales will continue to achieve strong pricings
• More end-user purchases across all sectors
• Mass residential market correcting; luxury prices buoyant
• Soft industrial market after the expiry of revitalisation
policies
2.5-3.0 2.8-3.2 3.0-3.5
Hong Kong Commercial Real Estate Investment Volumes
Office Retail
Hong Kong Market Statistics 6-12 Month Outlook
Deal availability No. of foreign buyers Cap rate trend
6
• The investment market should continue to
see en-bloc deals of office buildings over
the near-term.
• More assets should come to market.
Current high pricing level will prompt
developers to sell non-core commercial
assets to lock in profits and shore up their
balance sheet , in view of quiet primary
residential sales market.
• Due to rising US interest rates and a more
challenging rental outlook in 2017-18, we
expect potential yield expansion (up to 20
bps) over the next 2 years.
• Transaction volumes more than doubled y-o-y
in Q1 2016, as Chinese investors acquiring en
bloc assets showed no signs of abating.
• China Everbright purchased Dah Sing
Financial Centre for HKD 10bn with plan to
relocate/consolidate its offices to several floors.
• Link REIT acquired the Trade and Industry
Department Tower in Mongkok for HKD 5.9bn
and intended for office and retail use.
• En-bloc office sales continued to achieve
strong pricings, but some vendors were willing
to slash prices in recent retail transactions.
• Yield remained stable in Q1.
Office | Slow leasing activity amid a tight vacancy
environment. Insurers and Chinese companies
accounted for most new lettings.
Retail | Some retailers may opt to surrender leases
early in view of challenging market conditions.
Industrial | Relocation requirements by 3PLs
continued to drive new leasing activity.
Residential | Quiet leasing markets and secondary
home sales came to a standstill. Mass residential
CVs declined 3.6% y-o-y in February.
Hotel | Occupancy rates and room rates both
trending lower.
• The government is forecasting real GDP
growth of 1-2% this year (2.4% in 2015)
due to subdued exports and the prospect
of rising interest rates.
• As Mainland tourists account for nearly
80% of overall arrivals, falling tourist
arrivals from China will pressure tourism-
related sectors and retail sales.
• Housing market correction due to rising
interest rates, limited affordability and the
cooling measures remaining in place.
• HK$ interest rates should rise in tandem
with the US via the currency peg.
Industrial
Hong Kong Office (Central)
Source: JLL (REIS)
Dah Sing Financial Centre | Office | USD 1.29bn
Seller Sea Group | Buyer China Everbright Holdings Company Ltd
Trade and Industry Department Tower | Office USD 762m | Seller The Hong Kong Government Buyer Link REIT
Asia Pacific Capital Markets in Focus | Q1 2016
Outlook
Market
Conditions
Market
Fundamentals
Macro
Environment
Notable
Transactions
Fast Facts
Sources: JLL, Monetary Authority of Hong Kong
Transactional Yield Ranges (%)
5.0 Prime lending rate (% p.a.),
1Q16
Q1 2016 Total Transactions
(US$ bn)
+186% 2.9 Q1 2016 vs. Q1 2015
Change
No.5 Hong Kong’s Asia Pacific ranking
Real estate investment relative to size
Rent and capital value growth
Shanghai & Beijing
Johnny Shao
3.6.-5.5 4.0-6.0 5.5-6.5
China Commercial Real Estate Investment Volumes
Office Retail
China Market Statistics 6-12 Month Outlook
4.35 Lending rate: 1-year
(% p.a.), 1Q16
Deal availability No. of foreign buyers Cap rate trend
7
• Transaction volumes in China was up 10% y-
o-y in Q1. The large price gap between buyers'
& sellers' expectation resulted in a scarcity of
assets. However, a number of deals are
currently under negotiation.
• No shortage of fund availability, due to the
currently low cost of debt and ample liquidity.
• To date small/medium size developers do not
appear to face any refinancing pressure.
• Business park investment is in demand, and
entity-level transactions continued to be the
major industrial investment activity.
• Low yield on stabilized transactions.
Office | Smaller, city-level banks were the most
active occupier category in Shanghai while
technology companies were active in Beijing.
Retail | Affordable luxury retailers and fast fashion
brands sustained their pace of expansion.
Industrial | Demand coming from 3PLs, e-
commerce and auto makers. Stable rents.
Residential | Shanghai increased down payments
for second home purchase and put more
restrictions on non-local residents buying a home.
Hotels | Strong demand from the corporate sector.
The opening of the Shanghai Disney Resort is
expected to generate healthy lodging demand.
• Recent stimulus measures are gaining traction
and China’s economic data should further
improve in the months ahead.
• 2016 GDP growth is projected at 6.5%
(Consensus Economics). The two-speed
economy should continue in the next few years.
• Further cut s in bank required reserve ratios and
interest rates (-165 bps since 2014) are expected.
• China cut the deed tax for first home purchases
in February to boost sales and reduce inventory.
• The RMB is expected to fall against the USD in
2016, but remain stable in trade-weighted terms.
Industrial
Shanghai Office (CBD)
Source: JLL (REIS)
Shanghai Waterfront Place Block E & G | Office | USD115m Seller ARA | Buyer Pramerica Real Estate Investors Beijing Syswin Building | Office | USD 96m Seller Syswin Group | Buyer Rail Capital
Asia Pacific Capital Markets in Focus | Q1 2016
Outlook
Market
Conditions
Market
Fundamentals
Macro
Environment
Notable
Transactions
Fast Facts
-125
• Investment activity should remain at a
similar level to last year. Local investors
and self-use buyers will remain active,
• The long-term structural trend of Chinese
capital going global will continue. E.g.
Chinese insurers are becoming more
sophisticated with their outbound
strategies.
• A scarcity of assets on the market and
higher rental expectations may lead
investors to drive further yield compression
of core and core-plus assets.
Sources: JLL, PBOC, IMA Asia
Transactional Yield Ranges (%)
Q1 2016 Total Transactions
(US$ bn)
+10% 2.8 Q1 2016 vs. Q1 2015
Change
Monetary easing
since 4Q14 (bps)
No.9 Shanghai’s Asia Pacific ranking
Real estate investment relative to size
• Domestic capital is evolving to take advantage of
China’s investment market dynamics
• CBD assets will be highly sought after once available
• Polarised real estate investment market between
Tier-1 and Tier-2 cities
Rent and capital value growth
8
Singapore • Prices look compelling compared to other global cities,
presenting value opportunities
• Luxury residential prices seem to be bottoming out,
attracting strong interest from PERE funds
• Slowing rate of rental decline with evidence of a market
floor emerging
• Asset prices have come off from peak
levels and look compelling compared to
other global cities.
• Strong equity interest from PERE funds
and HNW individuals, despite near-term
weakness in market fundamentals.
• Niche sectors such as data centres and
self-storage facilities are much sought after
by investors.
• Yields are expected to remain stable
supported by benign interest rates and
deep liquidity.
• Singapore’s investment volumes was down
66% y-o-y in Q1 due to a lack of big-ticket
transactions.
• The largest strata-title transaction was the
bulk purchase of a strata development by
Scor Reinsurance (reportedly for self-use).
• There are a couple of large assets (CBD
en-bloc offices and some strata-title prime
offices) on the market, where pricing gap is
closing which may see increased
transaction activity over coming quarters
• Low debt funding costs. Flat yields in all
sectors in Q1.
Office | Slow expansion in the finance, insurance
and business services sectors limit net new
demand.
Retail | Subdued consumer spending and a labour
shortage continued to dampen retailer confidence.
Industrial | R&D and IT firms continued to support
business park demand. Patchy demand for logistics
space.
Residential | Luxury prices seem to be bottoming
out while mass market condo prices are still
correcting.
Hotel | The Singapore tourism sector is expected to
grow by up to 3% in 2016.
• Real GDP is forecast by the government
to grow 1-3% this year (2.0% in 2015).
Weak global outlook will be a drag on
growth.
• The government expects CPI inflation for
2016 of -1% and 0% (-0.5% in 2015).
• The government raised public
expenditure by S$5bn (7.3% y-o-y) to
boost growth.
• Visitor arrivals is forecast to grow by up
to 3% (15.7 million persons) and tourist
spending to grow 0-2% in 2016.
3.5-4.2 4.0-5.0 5.9-6.4
Singapore Commercial Real Estate Investment Volumes
Office Retail
SBF Centre strata units | Office (under development)
USD 60.9m | Seller Far East Organisation
Buyer Scor Reinsurance
Harper Kitchen | Industrial (for redevelopment)
USD 36m | Seller Yeap family
Buyer a consortium led by the Nanshan Group
Singapore Market Statistics 6-12 Month Outlook
Deal availability No. of foreign buyers Cap rate trend
Greg Hyland
Industrial
Singapore Office (CBD)
Source: JLL (REIS)
Asia Pacific Capital Markets in Focus | Q1 2016
All-in bank lending rate (%
p.a.), 1Q16
Outlook
Market
Conditions Macro
Environment
Market
Fundamentals
Notable
Transactions
Fast Facts
Sources: JLL, Singapore Government
Transactional Yield Ranges (%)
2.8-3.2
Q1 2016 Total Transactions
(US$ bn)
-66% 0.7 Q1 2016 vs. Q1 2015
Change
No.6 Singapore’s Asia Pacific ranking
Real estate investment relative to size
Rent and capital value growth
Seoul
Steven Craig
• Assets on the market (CBD office, hotels, industrial
portfolio) will appeal to buyers across the spectrum
• Strong growth of e-commerce sector supports demand for
modern, large scale distribution centers
• High availability of Seoul Grade B office assets but they
come with near term vacancy risk
4.25-5.0 4.0-6.0 7.0-7.5
South Korea Commercial Real Estate Investment Volumes
Office Retail
Korea Market Statistics 6-12 Month Outlook
1.5 BOK base rate (% p.a.),
1Q16
Deal availability No. of foreign buyers Cap rate trend
9
• Stronger volumes y-o-y on the back of
increasing deal availability.
• Several good quality large assets on
market are likely to lead transaction
activity in 2016. A Seoul Grade A office
and a hotel portfolio are in the bidder
selection process. Two industrial /
logistics portfolios are also on offer.
• Yields are expected to remain stable.
Capital values may fall slightly as buyers
are hesitant due to record prices.
• South Korea investment volumes tripled
y-o-y in Q1 to USD 2.3bn. The office
sector saw the strongest activity.
• The pricing gap between buyers and
sellers expectations seems to be
narrowing.
• Some landlords are looking to solidify
profits and more corporations are trying
to sell their offices in order to improve
balance sheet.
• Domestic investors (i.e. pension funds)
remained active purchasers.
• Yields remained stable in Q1.
Office | Weakness in the economy continues to
undermine leasing activity in Seoul.
Retail | Foreign tourists are driving increase in
sales of duty free goods and cosmetics.
Industrial | Strong demand for both lease and self-
owned facilities from e-commerce companies.
Residential | Stable apartment prices. Slowing
transaction volumes on tighter mortgage policies.
Hotel | Rising Chinese demand (45% of overall
visitor arrivals in 2015), but rates for hotels are
expected to remain compressed in the short term.
• The Bank of Korea (BOK) trimmed its
2016 real GDP growth projections to 3%.
• The weak external environment, in
particular due to sluggish demand in
China, weighs on South Korea’s export-
oriented economy.
• Contraction in manufacturing, dragged
down by weaknesses in key exports such
as semiconductors and cars.
• Policy rate at a record low of 1.5% but
low CPI inflation projections at 1.4%
provides room for 1-2 more cuts to help
domestic demand.
Industrial
Seoul Office (CBD)
Source: JLL (REIS)
Jongno Tower | Office USD 320m
Seller Samsung Life (86.7%) and Youngbo (13.3%)
Buyer IGIS Asset Management (Alpha Investment
Partners)
Samsung SDS Yeoksam Multi Campus HQ
Office | USD 105m | Seller Samsung SDS
Buyer NPS
Samsung Life Donggyodong Building | Office
USD 49m | Seller Samsung Life
Buyer Vestas Asset Management (Invesco)
Asia Pacific Capital Markets in Focus | Q1 2016
Outlook
Market
Conditions Macro
Environment
Market
Fundamentals
Notable
Transactions
Fast Facts
-50 Monetary easing
since 4Q14 (bps)
Sources: JLL, Bank of Korea
Transactional Yield Ranges (%)
Q1 2016 Total Transactions
(US$ bn)
+207% 2.3 Q1 2016 vs. Q1 2015
Change
Seoul real estate investment volumes
(2013-15) divided by current city GDP
2.4%
Rent and capital value growth
Mumbai & Delhi
Shobhit Agarwal
• Long term partnerships (JVs / Platforms) among
investors and developers are in focus
• New Real Estate Bill will increase transparency in
residential real estate
• Warehousing and Logistics gaining attention on the back
of GST Bill
8.5-10.5 9-11 10-11
India Commercial Real Estate Investment Volumes
Office Retail
India Market Statistics 6-12 Month Outlook
Deal availability No. of foreign buyers Cap rate trend
10
• Investment transactions are expected to
be strong this year, judging from the
current deal pipeline and level of interest.
• Given strong supply, smaller developers
could face a liquidity crunch, projects in
advanced stages of construction may be
available for sale.
• With REITs, a host of domestic
developers are likely to look at divesting
strategic stakes in their leased portfolio.
• Generally stable yield over the next 12
months.
• India’s real estate investment volumes
fell by 19% y-o-y to US$ 0.7bn due to a
lack of quality assets available.
• A notable deal for the quarter was GIC
acquiring a 50% stake in Viviana Mall,
Mumbai for about US$ 150m. This was
one of the biggest retail transactions in
recent years which also attracted strong
interest from other PERE funds.
• Continuing interest from PERE funds for
acquiring superior-grade leased assets
(projects in IT/ITeS Parks and IT SEZs).
• Yields remained stable in Q1.
Office | IT, consulting and financial services firms
remain key sources of demand.
Retail | F&B and apparel remain the most active
retailer categories.
Industrial | GST, E-Commerce and cold storage to
drive increase in grade A warehousing space.
Residential | A reduction for first time buyers on
interest repayment for loans, announced in the
2016-17 Budget, will boost the demand for housing
at the lower end of the market.
Hotel | Demand driven by the corporate segment
but leisure tourism is also growing. Future supply is
likely to be absorbed over the medium to long term.
• Forecast GDP growth in the 7-8% range
in Fiscal Year 2016-17, with slightly
stronger investment but weaker
consumption and external demand.
• India’s central bank cut the repo rate by
25 bps at its April meeting, and signaled
possibility of further easing this year.
• CPI inflation slowed sharply in February
after rising for six consecutive months.
• The 2016-17 Union Budget announced in
end-March removed REITs from the
dividend tax regime, which will increase
the appeal of REITs to retail investors.
Industrial
Mumbai Office (SBD BKC)
Source: JLL (REIS)
Asia Pacific Capital Markets in Focus | Q1 2016
Outlook
Market
Conditions Macro
Environment
Market
Fundamentals
Notable
Transactions
Fast Facts
-125
Mumbai
Equinox Business Park | Office
USD 355m | Seller Essar Group Buyer RMZ
Corp – QIA JV
GIC acquires 50% stake in Viviana Mall | Retail
USD 148m | Seller Sheth Corporation | Buyer GIC
Transactional Yield Ranges (%)
6.5 Repo rate (% p.a.),
1Q16
Sources: JLL, Reserve bank of India
Q1 2016 Total Transactions
(US$ bn)
+205% 0.7 Q1 2016 vs. Q4 2015
Change (INR terms)
Monetary easing
since 4Q14 (bps)
0.2% Mumbai real estate investment volumes
(2013-15) divided by current city GDP
Rent and capital value growth
Auckland
Nick Hargreaves
• A landlord favorable market is driving rental growth
across the city
• Auckland remains a gateway for international capital
entering the New Zealand market
6.3 – 7.3 4.5 – 8.2 6.5 – 7.8
New Zealand Commercial Real Estate Investment Volumes
Office Retail
New Zealand Market Statistics 6-12 Month Outlook
2.25 Deal availability No. of foreign buyers Cap rate trend
11
• Transactional volumes are forecast to
remain high over 2016 particularly in the
NZD 5M to NZD 20M price bracket.
• The office sector should remain the most
active commercial real estate sector.
• Yields are forecast to firm further in 2016
due to a combination of heated investor
competition, limited prime stock and record
low cost of capital.
• Auckland will retain the bulk of transactional
activity but investors will look further afield
over 2016 for investment opportunities.
• Three major completions occurred in
Wynyard Quarter through 1Q16 adding
approximately 33,000 sqm of space to the
market, which has satisfied some of the
pent-up demand for prime office space.
• Yields have firmed across all sectors into
2016 on the back of high demand for
investment grade property in relation to a
relatively small asset pool available on the
market.
• Investors are increasingly considering non-
core and value-add opportunities to satisfy
yield requirements.
Office | Resilient economic conditions and
increasing white collar employment have supported
robust demand for CBD space pushing some
tenants to fringe locations.
Retail | Sharp increase in prime Queen Street
rentals as more international tenants come to town.
Industrial | Vacancy is at a 10 year low which has
triggered development activity.
Residential | Prices volatile due to new regulations
and large amount of unsold inventory.
Hotel | Record international visitor numbers over to
the summer ending March 2016 (3.26M) has
underpinned the performance of the Hotel sector.
Cider Building , 4 Williamson Avenue | Office
USD 65m | Seller Progressive Enterprises
Buyer Oyster Group
Doubletree, Queenstown | Hotel
USD 56m | Seller Hongshen Tao | Buyer Shanghai
Pengxin Group
585 Great South Road| Office | USD 29m
Seller Goodman Property Trust | Buyer Private
Industrial
Asia Pacific Capital Markets in Focus | Q1 2016
Cash rate: (% p.a.),
1Q16
Outlook
Market
Conditions Macro
Environment
Market
Fundamentals
Notable
Transactions
Fast Facts
-100
• The dairy sector faces significant
challenges at present, however
economic growth will be supported by
tourism and construction activity over
2016. The economy is currently growing
at approximately 2.5%.
• The RBNZ cut the official cash interest
rate by 25 bps year-to-date to 2.25%.
• A booming housing market has recently
prompted the government to announce a
new capital gains tax on residential
property if it is bought and sold within
two years.
Q1 2016 Total Transactions
(US$ bn)
0.2
Sources: JLL, Oxford Economics
Transactional Yield Ranges (%)
Rental and Capital
Value Growth - Office
-44% Q1 2016 vs. Q1 2015
Change
Auckland Office (CBD)
Source: JLL (REIS)
Monetary easing
since 4Q14 (bps)
No.2 Auckland’s Asia Pacific ranking
Real estate investment relative to size
12
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