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October 24, 2017

Year-to-date volumes in Asia Pacific hit US$96 billion, 11 percent higher than the same period last year. While the region performed well overall, two big deals really helped drive the increase in deal making.

Capitaland Commercial Trust bought Asia Square Tower 2 in Singapore from Blackstone Asia Property Fund III for S$2.09 billion, making it the biggest office deal this year in Asia so far. It follows the record-breaking sale of Tower 1 last year.

In India, Singapore’s sovereign wealth fund GIC bought a stake in India’s DLF Cyber City for S$1.9 billion, making it the largest cross-border purchase in the regional real estate market during the third quarter.

For the Asia Pacific region, “these transactions were significant,” said Myles Huang, Research Director of Capital Markets for JLL Asia Pacific.

But a strong performance from key markets throughout Asia Pacific helped boost performance for the region in the quarter, Huang said.

Strong market attraction

“Australia saw stable performance, with strong interest coming from offshore capital sources and the emerging economies of Southeast Asia attracted the attention from international investors and developers who would like to tap into a growing population and rising urbanization,” says Huang.

“In particular, there were many mainland Chinese firms looking to tap into Indonesia’s attractive economic and demographic profile.”

Indonesia’s real estate sector received US$2.8 billion from international investors in 2016 and prospects in the country are optimistic for 2017.  Besides the Chinese who are buying up office units under construction, Singaporean firms are also eyeing the market. GIC announced a second joint venture with Indonesia developer Intiland for an integrated mixed-use development, Fifty-Seven Promenade, in August following their first partnership for the South Quarter office complex in April. Capitaland has also increased its exposure in Indonesia through its S$74.3 million investment in serviced residence Ascott Sudirman Jakarta.

Cross-border resilience

Such cross-border transactions accounted for 30 percent of total volume in Q3. “In fact, cross-border buyers continued to outpace cross-border sellers, particularly in Australia where the ratio is nearly two-to-one,” says Huang, adding that buyers are on the hunt for portfolio deals, such as Invesco Real Estate’s purchase of a portfolio of core assets in China from ESR for about US$300 million in Q3.

Looking ahead, it is likely that the logistics market will garner strong interest from investors in both mature and emerging markets.

“These are assets will present great opportunities for large-scale property investors looking to benefit from the growth in the manufacturing and e-commerce sectors.”

Click here to read more about cross-border real estate investment in Q3.

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Myles Huang

Asia Pacific Capital Markets Research Drector, JLL

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