breakdown of cumulative bids globally:
32%; Logistics 12%; Retail 10 %; Others 13%;
• Mutual aids and securities companies in South Korea coming up against liquidity concerns are starting to consider selling core assets to recapitalise.
• Investor sentiment turning positive on Hong Kong office sector as large private equity funds and global investors seek bargain hunting opportunities to acquire best in class at discounts.
• Deal initiations fell 29% MoM in November as all major sectors recorded lesser deals initiated during the month. Deal closings fell 7% MoM in November. Bid intensity decreased 13% for the period of September November 2022.
• Share prices of Asia Pacific REITs rose 3% MoM in November. Industrial, diversified, retail and office REITs recorded monthly gain, while hospitality and residential REITs declined slightly.
• The China Securities Regulatory Commission rolled out five measures to facilitate equity financing for Chinese developers, including allowing M&A, restructuring and private share placements, to support the sector.
• According to Hodes Weill and Cornell University, a third of investors are now overallocated to real estate. This is mainly attributable to the denominator effect where collapsing equities and fixed income values impact the allocation level in real estate, and the numerator effect in consequence of the strong performance of the real estate sector in 2021
Total number of unique bidders: 21,537; Average bid size: USD 52.0 mn
• China issues a 16 point plan to rescue its real estate sector. The initiatives range from easing restrictions on bank lending to diversifying fundraising, aiming at a soft landing of the ailing sector.
• Share prices of Asia Pacific REITs tumbled 10% MoM in October on the back of high inflation and rising interest rates. The sell off was largely across sectors Industrial, retail, residential, office and diversified REITs declined 8 4% 12% MoM Hospitality REITs held up better, falling 5.1% MoM.
• Office leasing activity in most APAC cities (China, Japan, Hong Kong and Singapore) weakened in 3Q22 as most tenants deferred leasing decisions and put expansion plans on hold. Expansion cases were largely coming from flex space operators as demand for flexible workspaces strengthened amid an uncertain operating environment
• Flight to quality is becoming an ongoing global trend for office occupiers. New completions typically enjoyed relatively robust enquiries and pre commitments Demand for good quality office space remains buoyant. Sublease space is rising in offices that are built before 2015.
• Logistics investments in Japan and Korea remain robust: Investors including M&G and Manulife are partnering with ESR, Logos to invest in new logistics development assets to fulfil strong occupier demand.
Note: Deal Initiation New launches recorded in JLL’s deal pipeline management platform; Bid Intensity Dynamics of bids received per asset on an indexed basis
• JLL forecasts widening office and retail yields in major markets, while industrial yield movements may bifurcate: The office and retail investment markets remain subdued in light of rising interest rates. Yields are expected to expand in Hong Kong, Singapore and key Australian cities as investors could turn conservative on bid prices and put downward pressure on capital values. Meanwhile, the underlying demand for industrial real estate remains robust despite increasing headwinds, driving rental growth Strong capital value growth is anticipated to continue in Tokyo with the possibility of further yield compression, whereas yields in Australia may decompress.
• The Bank of Korea raised its policy rate by 25 bps to 3.25% during its November meeting, matching market consensus.
• China’s PBOC kept its rates unchanged for the third straight month in November, despite downward pressure on its currency and economic slowdown due to rising COVID cases. The PBOC also decided to cut the reserve requirement ratio (RRR) for eligible financial institutions by 0.25 percentage points to keep liquidity reasonably ample and lower comprehensive financing costs.
• Inflation rates remain elevated despite rising interest rates. US CPI rose 7 7% YoY in October, coming in below expectations of 8%, but still the highest reading since 1982 In the UK, annual inflation rate jumped to 11.1% in October, higher than market forecasts of 10 7% and the highest inflation rate since 1981. Australian inflation raced to a 32 year high last quarter The annual rate shot up to 7.3%, from 6.1%.
• GLP announced the first closing of GLP China Value Add Partners IV with USD 1.2 billion in equity commitments and approximately USD 2.6 billion of investment capacity from APG and other institutional partners.
• SC Capital Partners formed a USD 2 billion data centre investment strategy with commitments from the Abu Dhabi Investment Authority.
• ARA has entered into a partnership with the Export Import Bank of China for the closing of a USD 1 billion infrastructure fund, named China ASEAN Investment Cooperation Fund II.
• Patrizia has launched a EUR 1 billion Japan focused fund to acquire core plus and value add multifamily assets in Tokyo and other major urban centres across the country over the next two to three years
• GLP announced the final closing of its sixth China income fund with RMB 7.6 bn in assets under management.
• Walton Street BlackSoil Real Estate Debt Fund II has invested Rs 165 crore in Sowparnika Homes for a portfolio of projects across Bengaluru.
• Sun Ventures bought the remaining 30% stake to take full ownership of PSGourmet, the parent company of restaurant chain PS.Cafe.
• Flexi Group consolidated three regional co working operators, The Hive, Common Ground and The Cluster, to form a large operator of flexible workspaces with a portfolio of 45 locations across gateway Asia Pacific cities. The merger is supported by investment from Catcha Group and Emissary Capital.
• DigitalBridge Group acquired a 49% interest in AIMS Data Centre from Time dotCom for MYR 2.01 billion, planning to grow the data centre platform in Southeast Asia.
• Indies Capital Partners has acquired a 60% stake in PT Swiss Belhotel International Indonesia and PT Zest Hotels International Indonesia from Ciputra Group to double down on its investments in the hospitality sector.
• CapitaLand India Trust Management and L&T Realty have entered into a non binding term sheet for a commercial platform to develop close to 6 million sq ft of prime office spaces across Bengaluru, Chennai and Mumbai
• The Philippine Stock Exchange has approved the IPO of the Villar Group’s Premiere Island Power REIT Corp. (Premiere REIT), estimated to raise up to PHP 3.2 bn.
• China will expand the pilot scheme for REITs to cover the spheres of new energy, water conservation and new types of infrastructure facilities.
• Celine and Gordon Tang, through investment firm Tang Dynasty Treasure, made an offer to acquire all remaining shares not owned by them in Chip Eng Seng in an all cash buyout valuing the company at around SGD 565 million.
• Nexus Select Trust, sponsored by Blackstone, filed a draft prospectus with India’s market regulator SEBI to launch the country’s first retail REIT
• Country Garden seeks USD 493 mn from share sale to help repay debt.
• Fosun International will raise USD 561 mn by selling part of its shares in Zhaojin Mining Industry Co as part of its ongoing string of asset sell downs.
Sources: CoStar, RCA, Invesco, Bloomberg and S&P
BLK Pyeongtaek Logistics Center
Pyeongtaek Industrial 158 AEW Capital
Land at Bukit Timah Link Singapore Residential Site 141
Land at Hillview Rise Singapore Residential Site 227
Wo Shang Wai Land Lots Hong Kong Residential Site 637
Jongno Tower Seoul Office 431
Wing Kwong Street/Sung On Street Hong Kong Residential Site 300
Chonbang Gwangju Industrial 254
73 Miller St Sydney Office 253
The Novel Industrial Building Hong Kong Industrial 108
Source: JLL, as at 2 Dec 2022. New deals in bold.
Pebblestone Asset
Bukit Sembawang Estates URA To yield 160 condos
Far East Organisation & Sekisui House URA To yield 335 condos
Undisclosed Evergrande
SK REITs KB AM
Sino Land, China Merchants Land GLS
Humans Holding, MBM Chonbang
UBS OBO client ESR, Partners Group
HKD 5,626 psf GFA, to yield 268 villas, sold by receivers
USD 661 psf GFA,2.8% yield, WALE 4.1 yrs, 100% occ
HKD 8,571 psf GFA, est to yield c.560 homes
USD 209 psf GFA, to be redevelope d
AUD 20,927 psm NLA, WALE 7.1 yrs
Black stone, Store friendly Chao family HKD 5,666 psf GFA
Property City Sector Price USD mn Buyer Seller Remarks MSIG Mingtai Headquarters Taipei Office 117 Taishin Financial MS&AD Insurance USD 842 psf GFA Managemen t USD 120 psf GFAForest Hill Chase Shopping Centre Melbourne Retail 174 Haben Property Fund & The JY Group Blackstone USD 284 psf NLA
Kerry Warehouse (Fanling 1) Hong Kong Industrial 140 Undisclosed Kerry USD 500 psf GFA
Mita M Square Tokyo Office 173 Undisclosed Minebea Mitsumi
Shin Kawasaki Mitsui Bldg (50% stake)
The
Kanagawa Office 166 SMFL Nippon Building Fund
USD 1,631 psf NLA, 100% occ
USD 386 psf NLA, 6.3% yield, 95% occ
USD 1,045 psf NLA, 3.7% yield, 100% occ
USD 252 psf NLA, 3.8% yield, 98% occ
Plot 1
Xingzhi Tech City (45% stake) Jiangsu Mixed use site 246
Source: RCA, as at 2 Dec 2022. New deals in bold.
Minmetals, China Cinda AM Shimao Group USD 181 psf GFA
AUD EUR GBP HKD JPY KRW NOK NZD SEK SGD USD
AUD 5.0% 6.7% 5.2% 5.1% 9.3% 6.0% 5.7% 4.4% 6.1% 6.2% 5.2% AUD
EUR 3.3% 5.0% 3.5% 3.4% 7.6% 4.3% 4.0% 2.7% 4.4% 4.5% 3.5% EUR
GBP 4.7% 6.4% 5.0% 4.8% 9.0% 5.8% 5.5% 4.1% 5.8% 5.9% 5.0% GBP
HKD 4.8% 6.5% 5.0% 5.0% 9.1% 5.9% 5.6% 4.2% 5.9% 6.0% 5.0% HKD
JPY 0.7% 2.3% 0.9% 0.8% 5.0% 1.7% 1.4% 0.0% 1.8% 1.9% 0.9% JPY
KRW 3.8% 5.4% 4.0% 3.9% 8.0% 5.0% 4.5% 3.1% 4.9% 5.0% 4.0% KRW
NOK 4.2% 5.9% 4.4% 4.3% 8.5% 5.3% 5.0% 3.6% 5.3% 5.4% 4.4% NOK
NZD 5.6% 7.3% 5.8% 5.7% 9.9% 6.6% 6.4% 5.0% 6.7% 6.8% 5.8% NZD
SEK 3.9% 5.5% 4.1% 4.0% 8.2% 4.9% 4.6% 3.2% 5.0% 5.1% 4.1% SEK
SGD 3.7% 5.4% 4.0% 3.8% 8.0% 4.8% 4.5% 3.1% 4.9% 5.0% 4.0% SGD
USD 4.8% 6.4% 5.0% 4.9% 9.1% 5.8% 5.5% 4.1% 5.9% 6.0% 5.0% USD
Key assumptions: Tenor 5 years; Periodicity annual; Local distribution 5.00%;
Source: Bloomberg, 2 December 2022
September November deal initiations as of 2 Decem ber 2022
Deal initiations fell 29% MoM in November as all major sectors recorded fewer deals initiated during the month.
Deals initiated by sector
Deal initiations in November largely originated from Australia.
Deals initiated by country Note:
September November bid details as of 2 December 2022
Deal closings fell 7% MoM in November.
Deals closed in APAC
Bid intensity (three months rolling average):
Bid intensity decreased 13% for the period of September November 2022.
Bid intensity Index (excluding those with 1 bid)
Market
Country
Australia 72,366 5.3% 1.5% 14.7% 18.2% 35.8% 4.0% 6.5% Japan 62,392 0.8% 2.7% 0.9% 3.0% 11.0% 3.4% 2.6% Hong Kong 17,938 8.1% 14.9% 23.0% 24.5% 40.1% 6.2% 5.7% Singapore 55,386 1.7% 6.6% 10.2% 11.2% 3.8% 5.4% 3.9% Overall 208,082 2.8% 6.6% 10.1% 12.4% 4.7% 4.4% 4.6%
Sector
Industrial 61,109 5.2% 4.7% 17.7% 21.9% 54.1% 3.6% 4.7% Diversified 47,928 2.3% 0.9% 8.2% 9.2% 2.4% 4.7% 4.4% Retail 46,840 2.6% 4.4% 4.9% 7.4% 23.8% 5.3% 5.1% Office 37,479 1.2% 5.7% 14.0% 14.2% 24.8% 4.9% 5.1%
Hospitality 8,985 1.4% 1.7% 15.9% 15.1% 22.3% 2.5% 1.9%
Residential 5,742 0.6% 7.2% 1.8% 9.1% 5.4% 3.3% 2.9%
Index
FTSE Australian Equity Index n.a. 10.0% 6.1% 22.6% 20.3% n.a. n.a. n.a.
FTSE Japan Index n.a. 8.5% 7.5% 30.0% 29.0% n.a. n.a. n.a.
FTSE Hong Kong 100 Index n.a. 10.1% 18.1% 27.2% 27.9% n.a. n.a. n.a.
FTSE Straits Times Index n.a. 2.9% 1.1% 2.8% 3.3% n.a. n.a. n.a.
Note: n.a. Japanese REITs depreciate properties on balance sheet
Source: JLL, Capital IQ
Australia Offices
Strong Strengthening Static/Resilient Weakening Weak
>20 bps decompression
Australia L&I >20 bps decompression
Australia Retail >20 bps decompression
China Offices* >20 bps decompression
China L&I* Static
China Multifamily* up to 20 bps decompression
South Korea Offices up to 20 bps decompression
South Korea L&I up to 20 bps decompression
South Korea Retail up to 20 bps decompression
Japan Offices* Static
Japan Multifamily Static
Japan L&I Up to 10 bps compression
Singapore Offices* >20 bps decompression
Singapore Logistics Static
Singapore Retail* >20 bps decompression
Hong Kong Offices* up to 20 bps decompression
Hong Kong L&I* >10 bps compression
Hong Kong Hotels* Static
Pamela Ambler
Head of Investor Intelligence +65 9351 1669
Pamela.Ambler@jll.com
Authors Contact Us
Stuart Crow
CEO, APAC Capital Markets +65 6494 3888
Stuart.Crow@jll.com
Tim Graham
Head of International Capital +65 9638 6227
Tim.Graham@jll.com
Jeffrey Sun Research Manager +852 2846 5152
Jeffrey Sun@jll.com
Martijn van Eldik
Head of Equity Advisory +65 9628 9934 Martijn.Vaneldik@jll.com
Paul Brindley
Head of Debt Advisory +65 8028 7794
Paul.Brindley@jll.com
© 2022 Jones Lang LaSalle IP, Inc. All rights reserved. This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information in the report is accurate or complete. Any views expressed in the report reflect our judgment at this date and are subject to change without notice. Statements that are forward looking involve known and unknown risks and uncertainties that may cause future realities to be materially different from those implied by such forward looking statements. Advice we give to clients in particular situations may differ from the views expressed in this report. No investment or other business decisions should be made based solely on the views expressed in this report.