Cap rates, the estimated yield of a property over one year, are on the rise in only five of 19 cities in Asia Pacific, all of them located in Australia, suggesting a still listless real estate market for most of the region in the fourth quarter of 2023, a survey by diversified professional services and investment management company Colliers showed Thursday.
The five Australian cities that showed upward movements quarter-on-quarter across all sectors were Adelaide, Brisbane, Canberra, Melbourne and Perth.
In Manila, most major property transactions were between real estate investment trusts and their sponsors, resulting in insufficient evidence to support cap rate movement.
Colliers said demand for office space in Manila “remains lethargic” and there is an increase in supply pressure as new office buildings come onto the market.
Although China’s economy has shown signs of recovery, Colliers noted this is slower than expected, forcing investors to stay on the sidelines and take conservative measures. At the asset level, landlords are accepting lower rents to increase occupancy rates and maintain a stable income, it noted.
In Hong Kong, transactions that took place in the fourth quarter were mainly driven by end-users and local investors, indicating that the market is approaching its lowest point. The expected rate cuts from the Federal Reserve could nudge investors to start bottom fishing, driving more activity in Hong Kong’s property market this year.
Colliers said the Singapore cap rates have remained steady due to its macroeconomic stability and the strong holding power of asset owners. There has been continuous investment interest, especially from private wealth as well, it added.
It expects the cap rates in Singapore to remain stable in the near term and may decrease if interest rates drop in the second half of 2024.
Cap rates for Taipei remained relatively flat, supported by transacted cases across sector, although the number of deals was low.
