Despite Chinese fund flows slowing commercial real estate investment across Asia rose during the first quarter of 2017, will it continue?
Real estate services firm CBRE reports that with the capital restrictions still biting, both Australia and China saw turnover decline by 46 percent and 29 percent, year on year, respectively. China failed to see any deals above $250 million as domestic investors instead focused on smaller assets including decentralised offices in tier one cities.
The positive markets across Asia included Singapore, where stronger activity from foreign buyers lifted transaction volume to $2.1 billion and Japan, which saw more deals completed outside Central Tokyo as owners took profits on non-core assets or sold to improve their balance sheets.
One significant deal witnessed Singapore bank DBS sell the PwC Building at Cross Street to a unit of Manulife Financial Group in a deal which valued the skyscraper at $774 million Singapore dollars.
Sovereign Wealth Funds Hunting in Asia
Cross-border investment in Asia rebounded, rising by 33 percent compared to 2016, hitting $7.1 billion. Activity was led by capital from North America and Hong Kong, but Chinese investors turned quieter, with outbound investment falling more than 75 percent.
Transaction activity is expected to remain stable, with a steady flow of deals in South Korea, China and Singapore. However, the average deal size is predicted to be smaller, following the trend set by Australia and China in the first quarter of 2017.
The Qatar Investment Authority, which acquired Asia Square Tower 1 in Singapore, is said to be looking at further investment in the Lion City, while the CEO of the Norwegian wealth fund, the world's biggest, has been quoted as saying they do not see attractive property projects in Singapore and Tokyo at present.
