Office Deals In Asia Pacific Down 45% In Q3
ASIA PACIFIC – MSCI Real Assets’ Capital Trends report that was published last week showed that sales of commercial properties (office, retail, and industrial) across the region fell by 42 percent year-on-year to US$27.8 billion during the 3rd quarter. This brought the overall tally so far this year to US$111.4 billion, which translates to a drop of 20 percent on an annual basis, reported Mingtiandi on Sunday evening (13 November, SGT).
In particular, sales of office properties across Asia Pacific plunged by 45 percent year-on-year to US$14.9 billion in Q3 2022, while the retail segment registered a higher drop of 54 percent to US$4.2 billion.
Even the industrial property segment suffered a decline of 24 percent year-on-year to US$8.7 billion. However, it was propped up by just one deal – JD.com’s purchase of China Logistics Properties and its portfolio of 42 assets that are valued at nearly US$3 billion. Without that major transaction, logistics property investment would have been at its slowest quarter in five years.
“The rapid changes in the macroeconomic environment are now bearing down hard on the commercial real estate market and the slowdown has deepened in the third quarter,” explained MSCI’s Head of Asia real assets research Benjamin Chow.
“Not only is new deal-making activity dwindling, but deals are also falling through, which is a negative signal for upcoming quarters.”
For instance, the biggest Q3 office deal recorded by MSCI was the US$879 million sale of Hong Kong’s Goldin Financial Global Centre, but recent media reports stated that the office transaction was scrapped.
Excluding the Goldin Financial Global Centre, the volume of axed commercial property deals during the quarter totalled US$6 billion. MSCI said the figure translates to nearly 20 percent of overall transaction volume (successful deals) in Asia Pacific.
Q3 2022’s next-largest office deal was Hulic’s US$849 million resale of Yokohama’s Minato Mirai Center Building to M&G Real Estate. Notably, Japanese developer Hulic had acquired the 21-storey office tower from Goldman Sachs’ asset management division in the second quarter for US$835 million.
Other major office transactions in the 3rd quarter included Lendlease’s US$582 million purchase of a 49 percent interest in a joint venture with Singtel to redevelop the telco’s Comcentre HQ in Singapore’s famed Orchard area. Another is Singaporean sovereign wealth fund GIC’s acquisition of a 50 percent stake in the US$568 million Melbourne office project, 555 Collins Street, from Aussie developer Charter Hall.