Knight Frank Asia Pacific Insights: February 2021

Australasia

Healthy prime residential demand boost developer sentiments.

Australian prime residential demand is holding up despite the pandemic conditions. Lendlease, developer of One Sydney Harbour at Barangaroo South, is planning to bring forward the launch of its second tower after selling out most of its first of three towers according to the AFR. Currently, around 85% of Residence One has been sold, mostly going to local buyers at an average price of around A$6.6 million. Residence Two is planned to launch shortly and comprises 322 apartments which will have view north of Harbour Bridge and the Opera House.  

Mortgage wars continue to fuel housing demand in New Zealand.

Major mortgage banks in New Zealand are currently waging a mortgage war with a race to the bottom. This was started by Westpac in early January with a 2.99% one-year fixed term package, which many others soon followed suit. Banks are currently sitting at a one-year-fixed term rate of 2.29% offered by BNZ, the lowest rate is 1.99% offered by Heartland Bank. With housing prices having risen 19.3% year-on-year nationally in 2020 and demand continuing to remain unabated so far this year, banks are expectedly jostling to capture as much market share as they can. However, this inevitably heightens the likelihood of the government stepping in to cool the market speculation which we project will happen over the near term if prices continue their current trajectory.  

East Asia

Nippon Express looking to sell Tokyo HQ.

Japanese logistics firm Nippon Express has announced its intentions to sell its Tokyo HQ for a reported price of ¥100bn. The firm is current building its new HQ on another Tokyo site and had originally planned to rent out its old premises as telecommuting remains the preferred mode of work and the tougher occupier market conditions. Furthermore, several funds have expressed interest in the prime located asset which would have contributed to management putting up its sale as a consideration.

Mainland China’s Tier 1 new home price growth above national average.

New home prices among the Chinese mainland’s Tier 1 cities rose 0.3% MoM in December, much faster when compared to the 0.1% MoM average price growth recorded on the national level across 70 major cities. For 2020, new home prices across the country rose 3.8% YoY, a healthy return despite the black swan events of last year, with 42 reporting price growth compared to 36 back in November. While prices continue to grow at a steady pace, the authorities are cognizant of growth potentially over-correcting as the economy starts to recover and have tweaked certain purchase policies, such as enforcing loan regulatory requires and limiting the home purchases for three years post-divorce - as seen in Shanghai, to prevent any potential overheating.

Southeast Asia

Malaysia soon to be home to one of the world’s largest logistics hubs.

Australia’s LOGOS is spearheading the development of LOGOS eCommerce Hub over the coming six to seven years on a 28 hectares land plot in Shah Alam with a total cost of RM1.5 billion. The project is set have around eight million square feet in gross floor area spread across five warehouses with the first set to complete in three years. Shah Alam is located strategically within the wider Klang Valley region which encompasses Kuala Lumpur and is the economic heart of Malaysia.  Furthermore, the development is expected to liven up the area’s economy and will bring a much-needed boost to its real estate market.

SG-MY High-Speed Rail termination not entirely negative.

The Singapore and Malaysian governments terminated the highly anticipated high-speed rail project earlier in January with both sides failing to reach an agreement on certain terms. While this cancellation will negatively impact the property market in the Iskandar Puteri region where the station was to be situated, there are others who stand to benefit. Namely Johor Bahru’s city centre and the Danga Bay area, where the current causeway link to Singapore stands, which is expected to become more popular with homebuyers and developers now.

DBS sees 'pre-emptive' policy response to curb higher property prices.

Singapore’s biggest housing lender DBS is predicting that the government could introduce policies over the near term to keep check on the city-state’s accelerating property price growth seen in recent months, despite the economy reporting a record recession year. Residential property prices in Singapore posted a strong performance in Q4 2020, rising 2.1% quarter-on-quarter, which brought the full year’s annual growth to 2.2%. Among the potential policy tweaks market watchers are anticipating include changes to current loan quantums or additional buyer stamp duty rules. 

South Asia

India’s real estate sentiment turns positive in December 2020 quarter. 

For the first time in 2020, real estate market sentiment turned positive according to the Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Survey with a 54-point reading during the Oct to Dec 2020 quarter, where 50 points denotes neutrality. The optimism was seen across both the residential and commercial sectors with respondents bullish that residential sales and office leasing activity would increase over the next six months. This is a strong indicator of the economic recovery that is to come as the country starts to embark on its return to normal as vaccines start to rollout nationwide, despite the ongoing raging battle against the pandemic.