It’s a mixed bag in 2018 with Ho Chi Minh City in the lead while Taipei sees fewer investors.
The survey results for this year’s Emerging Trends in Real Estate® Asia Pacific report by pwc and Urban Land Institute reveal the following:
Leading buy/hold/sell ratings for the various asset classes are as follows:
• Office—buy Ho Chi Minh City, sell Taipei.
• Residential—buy Ho Chi Minh City, sell Seoul.
• Retail—buy Ho Chi Minh City, sell Taipei.
• Industrial/distribution—buy Shenzhen, sell Taipei
After two years of declining rents caused by a sluggish economy and a glut of supply, Singapore’s office market ranking has soared from next-to-bottom last year to third this year. Some, however see talk of a bottoming as premature.
The residential sector is also showing signs of bottoming, with rising transactions and a slight uptick in pricing for the first time in four years. The rebound seems likely to be sustainable, given the momentum of several years’ worth of pent-up consumer demand.
This year, Shanghai has performed better than expected. Transactions have been driven partly by surging demand from domestic buyers who have been barred from exporting capital as a result of a government regulatory crackdown, and partly by foreign core funds flush with new capital they need to deploy.
Investors have always played the rental growth/capital appreciation card in Shanghai and given strong ongoing demand for office space, this trend will continue. Also, a lack of available stock in prime locations is driving an increasing amount of activity into fringe CBD or outlying parts of the city.
Ho Chi Minh City
A large amount of cash is pouring into this city, thought to repeat Mainland China’s rise from 15 years ago in terms of property price inflation. Bureaucracy remains an issue, but restrictions are slowly being eased. Investors from South Korea and Japan love it.
Most investors are focused on the residential sector. Home sales and pricing have been strong over the last three years, but in a volatile market there are signs the cycle may be peaking.
Given the small amounts of investible stock, those focused on the commercial side will be looking mainly at development, usually by way of joint ventures with local developers. Completed assets do exist, however. With most existing stock having been built by domestic developers, there are now opportunities to buy and fix.