SINGAPORE, 6 November 2017 – Investors are channelling their capital into Asia Pacific, given the challenge of finding value in deals worldwide, according to new figures released by JLL. Inter-regional investors remained active as they target India, China and Australia, with continued appetite from international funds for real estate in the region.
A major private equity deal in India is the latest in a series of high-profile investments into Indian real estate by institutional players this year. The real estate arm of German insurer and asset manager Allianz announced in October that it is partnering with Indian Sharpoorji Pallonji Group to establish a fund worth US$500 million, targeting the office market in India. JLL advised Sharpoorji Pallonji Group on the transaction.
“Commercial real estate transactions in Asia Pacific held up remarkably well into the third quarter of 2017,” says Stuart Crow, Head of Asia Pacific Capital Markets, JLL. “Emerging economies such as India are attracting the attention of global investors and developers, who are keen on the growing population and subsequent urbanisation.”
Global transaction volumes for Q3 came in at US$166 billion, with no change compared to the same time last year. Meanwhile, transaction volumes in Asia Pacific rose by six per cent compared to the third quarter last year, at US$35 billion. This brought Asia Pacific’s year-to-date volumes to US$95.8 billion, 11 per cent higher than this time last year.
“India is the standout in Asia Pacific, and the top picks for investors include Mumbai, NCR and Bangalore, with more than two-thirds of total investments flowing into these cities. Most of this capital is flowing into office assets – both core and core plus – and residential assets under development,” says Ashutosh Limaye, Head of Research, JLL India.
Real estate transaction volumes reached US$2 billion in India in Q3, with Singapore sovereign wealth fund GIC’s US$1.4 billion joint venture with DLF Cyber City Developers forming one of the largest cross-border purchases in the regional real estate market in the quarter. The joint venture involved a portfolio of office and retail assets across India in August.
Singapore’s real estate market bounces back
After a sluggish start to the year, Singapore bounced back and recorded its second best quarterly result on record with transaction volumes of US$4.3 billion on the back of a mega-deal. The sale of Asia Square Tower 2 was the largest office transaction in Asia Pacific in the first nine months this year, with CapitaLand Commercial Trust purchasing the office tower for US$1.54 billion.
“Singapore’s property market has largely turned the corner, underpinned by a brightening economic outlook,” says Tay Huey Ying, Head of Research & Consultancy, JLL Singapore. “Residential and prime CBD Grade A office assets are poised to remain as investor favourites for the rest of 2017 and 2018.”
In Hong Kong, a flurry of activity from offshore capital helped boost third quarter volumes to US$3.1 billion, up 27 per cent year-on-year and bringing year-to-date investment up nine per cent compared to 2016.
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