2016: An active year for Asian investment
Total investment volumes in Singapore were boosted by the largest single transaction in Asia last year, the landmark sale in Q2 of Asia Square Tower 1 to the Qatar Investment Authority for over S$3b.
Whilst interest in Asian property from investors based outside the region remains modest, intra-regional investment has been very strong. Based on RCA data, aggregate intra-regional property investment in Asia reached US$69.3B in 2016, a 34% increase from US$52.9B in 2015. The statistics from RCA match the evidence from other sources that 2016 was a very active year in Asian property investment markets.
Perhaps the chief point to note is that property transaction volume in China has strengthened significantly. In fact, as measured by total property transaction volumes excluding undeveloped land,
China has overtaken Japan to become the region’s top country investment market. Japan’s status over many years as the Asia Pacific region’s top property investment market reflects Tokyo’s position as Asia’s largest single urban property market. However, property transaction volumes in Japan fell by 37% in 2016 to US$29B as a consequence of a sluggish economy (one of the weakest in Asia at present) and the strength of the Japanese yen last year, which deterred foreign investment. The decline in investment activity accelerated in Q4 2016, which saw a 68% drop in investment to US$4.2B.
By contrast, over 2016 as a whole total property transactions in China increased by 10% to US$36.5B, thereby just exceeding the level in Japan. This strength accelerated in Q4, which saw a 32% year-on-year increase in transaction volumes to US$14B. For 2016 as a whole, China accounted for 28% of aggregate property transactions in the region, whilst for Q4 2016 the proportion was 35%.
Besides China, Hong Kong and Singapore enjoyed very active investment interest in 2016.
Strong investment interest
Besides China, Hong Kong and Singapore enjoyed very active investment interest in 2016. In Hong Kong’s case, total property transaction volumes increased by 15% over the year to US$13.5B, on which basis Hong Kong ranked as the fourth largest country investment market in Asia Pacific. In Singapore’s case, total property transaction volumes increased by 38% over the year to US$8B, on which basis Singapore ranked as fourth largest country investment market in Asia Pacific.
Total investment volumes in Singapore were, of course, boosted by the largest single transaction in Asia last year, the landmark sale in Q2 of Asia Square Tower 1 to the Qatar Investment Authority for SG$3.38B (US$2.43B). However, investment activity remained strong in H2, with 44% yoy growth in Q4 to US$3.2B.
As an urban centre rather than a country, Hong Kong ranked as the third largest investment market in 2016 in the Asia Pacific region after Tokyo and Shanghai, whilst Singapore ranked sixth. However, perhaps the biggest surprise in the region was Seoul, which saw a 142% increase in total transaction volumes to US$9.92B, and on
Property transaction volume in China has strengthened significantly