Asia Pacific Investments Grow, Leasing Suffers

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Property markets in Asia Pacific are reporting mixed performance with a sharp difference in leasing and investment activity across all property types. 

The region has experienced a decrease in leasing while investment continues to strengthen, according to Jones Lang LaSalle's latest quarterly report on office, retail, industrial, residential and hotel real estate markets in over 20 key cities across Asia Pacific.  

The region's two biggest economies have reported significant changes in economic performances.  

"China is slowing as its government looks to transition to a consumption led growth model," the report says. "Conversely, Japan is picking up after its government announced a huge stimulus program in April to reignite the economy after two decades of stagnation - although the success of 'Abenomics' in the long run is still far from certain." 

Japan reported a 78 percent year-over-year increase in investment volumes, accounting for one-third of regional activity during the quarter. Investment volumes in Hong Kong were down 50 percent from last quarter after the introduction of a higher stamp duty in February. Almost 85 percent of purchases in the region during the second quarter were by domestic buyers.

Overall, regional investment activity reached $33 billion during the second quarter, increasing 18 percent from last year, with Japan, Australia and China accounting for most of the activity. For the first half, investment volumes totaled $60 billion, a 21 percent increase from last year. 

Southeast Asia's economic performance has been generally resilient, particularly in Indonesia and the Philippines, while India, Australia, Hong Kong and Singapore are running at below-trend growth.

Contrary to investment volumes in the region, leasing activity in the region has suffered. 

Office leasing activity in the region has slowed as corporate occupiers continue to show caution. During the second quarter, aggregate net absorption declined 26 percent from last year and was around 20 percent below the three-year quarterly average. China and India accounted for nearly 80 percent of the total take-up.

Retail rental growth was grew slowly from 0.5 percent to 2.5 percent from last quarter, except for India, Singapore and Australia, which showed mostly flat rents. Residential leasing in the region remained flat or showed modest growth from 0.5 percent to four percent from last quarter. Leasing demand was stronger in the Southeast Asian markets of Jakarta and Manila, JLL reports.