Commercial real estate transaction volume fell by 33% q-o-q to US$23 billion in Q3 2018 as investors in China and Hong Kong shifted into wait-and-see mode. Year-to-date transaction volume also declined, falling by 7% y-o-y to US$85 billion. Active markets included Australia, with Sydney and Brisbane seeing the completion of several major deals, and Korea, where local conglomerates continued to dispose of office properties. Total cross-border investment volume registered US$4.5 billion, representing 19% of total investment turnover, well below the previous four quarters’ average of 27%.

Office leasing activity slowed, with net absorption falling 4.0% q-o-q to 14.5 million sq. ft. NFA, mainly due to weaker leasing activity in Beijing and Shanghai. Demand continued to be led by the finance, TMT and coworking sectors. Vacancy remained flat at 11.1%. Rental growth picked up to 1.4% q-o-q or 4.1% YTD, driven by limited availability and relatively healthy demand in Guangzhou, Singapore and the Pacific.
The regional retail market remained stable, with major markets including Hong Kong, Japan and Korea reporting improving sales growth.. Leasing demand was led by F&B and experiential trades. New retail supply stood at just 8.3 million sq. ft. as project delays continued. Rents rose by 0.5% q-o-q, driven by growth in Auckland (+3.3% q-o-q) and Sydney (+2.1% q-o-q).
Logistics demand was unaffected by trade conflict and other economic headwinds as warehouse leasing activity continued to be supported by steady domestic consumption. Vacancy was largely unchanged while new supply remained steady, standing at 20 million sq. ft. for the quarter. After outperforming in H1 2018, logistics rents saw stable growth in Q3 2018, rising by 0.6% q-o-q, led by Melbourne and Shenzhen.”

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