Investment fell by an annual rate of 14 per cent in the region last quarter as high interest rates kept prices of commercial properties elevated, according to a survey published by the property consultancy on Monday. Investors in the region, especially real estate funds, property companies, and banks – were notable net sellers, it added.
CBRE surveyed 136 people in the region from April 1 to 17.
Investment volume in mainland China declined by 23 per cent from a year earlier, with most acquisitions being made by domestic corporations. Sellers outnumbered buyers in Hong Kong, where 69 per cent of the survey respondents indicated “stronger selling intentions,” CBRE said.
Economists have pushed back forecasts on US rate cuts after the economy continued to show strength, with latest reports showing higher factory output in March and sticky inflation in February. There is less than a 50 per cent chance of a cut in the Federal Reserve’s target rate in the June and July meetings. The odds are more than 50 per cent for one or more rate cuts in the September meeting, according to data compiled by CME Group.
HKMA says high rates ‘may last’ as it delays cut in lockstep with Fed
HKMA says high rates ‘may last’ as it delays cut in lockstep with Fed
CBRE said Japan overtook China as the most active investment market for commercial properties last quarter. The nation contributed 30 per cent to total investment volume in the region, as cheaper borrowing costs and stronger fundamentals worked in its favour, it added.
While investment appetite remains subdued in most Asia-Pacific markets, the CBRE report noted that financing pressure has begun to ease and a market recovery is likely to gain momentum later this year.
“Interest rates in Asia-Pacific have likely peaked, and financial pressure is easing,” Henry Chin, head of research at CBRE Asia-Pacific, said in the report. “With investors displaying a stronger focus on underlying asset performance, prime assets in core locations are keenly sought after.”
Hong Kong home sales to mainland Chinese buyers spike, agents say
Hong Kong home sales to mainland Chinese buyers spike, agents say
Capitalisation rates in most property markets in the region are expected to continue to increase in the next six months, with rates in Australia set to expand further while those of Japan stabilise. The rate measures a property’s value by dividing its annual income by its sales price.
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Chinese investors offloading overseas properties
Chinese investors offloading overseas properties
“Hotel and multifamily assets are also in demand given current cyclical and structural tailwinds,” Chin said. “In contrast, debt strategies are falling out of favour due to the limited funding gap in Asia-Pacific compared to the US.”
In terms of funding, private investors have been more active with their investments, while real estate funds and real estate investment trusts have been reshuffling their portfolios and selling secondary assets to raise cash for future buying opportunities, the CBRE report showed.
“Investors should target buying opportunities in the second half of 2024 and focus on prime assets,” said Greg Hyland, head of Asia-Pacific capital markets. “Motivated sellers will adopt a more flexible stance towards asking prices, helping narrow the gap with buyers” and close deals before rate cuts arrive, he added.
