RCA Insights

China Bucks APAC Trend; Japan, Australia Multifamily Jump

By on July 28th, 2020

China’s commercial real estate market rebounded in the second quarter of 2020, while the worsening economic outlook took its toll on investment sentiment across the majority of sector-markets in the region.

The demand for Chinese office skyscrapers leaped, with nine buildings priced over $250 million changing hands in the quarter. Logistics facilities and data centers also remained in vogue, helping China’s investment volume to double the tally of Q2 2019, according to preliminary Real Capital Analytics data.

Investors have stayed away from retail investments in markets with extended lockdowns and resurgent Covid-19 case counts. With income streams under siege, a key question is how long sellers of retail assets can hold out before giving way on pricing. Hong Kong affords us a glimpse of what the road ahead might be like. Over 12 months since the political unrest began, retail yields have risen almost 100 bps above their trough and volume in the market is finally starting to recover.

After a record year of hotel investment in 2019, the sector slumped across the region this year. In contrast, interest in multifamily assets surged in the region’s two primary markets of Japan and Australia. Blackstone’s purchase of a $2.8 billion portfolio of residential apartments in Japan and Scape Australia’s $1.4 billion buyout of Urbanest student dormitories were the two big deals that closed in the second quarter.

RCA will publish the Q2 2020 edition of Asia Pacific Capital Trends on August 5. This report examines pricing and deal activity trends for all the major property types and markets in the second quarter and ranks the biggest deals and most active players of H1 2020. 

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Chart: Trends in Commercial Property Deal Flow Since GFC

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Cross-Border Investors Continue Spending in Australia

Benjamin Chow

Head of Analytics, Asia

Benjamin Chow is the Head of Analytics for Asia, based in RCA’s Singapore office and a lead author on Asia Pacific Capital Trends. His expertise spans both the commercial and residential real estate markets in Asia Pacific.