News

Rental decline slowed down compared to the first half of the year.

Median house price in the area grew 3.8% to $622,500, and median unit price increased 2.4% to $420,000.

The workplace-related changes will boost demand for conference halls, convention centres as well as CBD/Orchard Road retail.

Three shopping centers will open in the next six months.

Over four in 10 developers are changing designs that were once considered complete.

But this is due to elevated investment levels last year, not weak investor sentiment.

Given the airtight conditions, rental growth in Greater Tokyo was close to 7% over the year. Even amid a global pandemic, Savills notes Japan’s logistics sector appears to be in good shape. Indeed, with demand supported by the proliferation of e-commerce during the outbreak, the sizeable supply expected over the next few years has done little to deter the market. Yet, whilst some turbulence could emerge over the short-term as the financial resilience of some tenants starts to be tested, the long-term prospects of the sector continue to be driven by the structural changes that e-commerce presents, and as such, rents should follow suit. Here’s more from Savills: MARKET TRENDS Having achieved the milestone of posting the lowest level of vacancy on record in Q1/2020, the Greater Tokyo market repeated the trick in Q2/2020. Specifically, the vacancy rate stands at an even lower 0.4% following a 2.9 percentage points (ppts) tightening year-on year (YoY). Pre-leasing activity remains sound, all things considered, with over 80% of new facilities fully occupied upon completion in 1H/2020. Demand for existing facilities was also strong. In fact, whilst the total leasable area has continued to expand, much of this tightening in vacancy can be attributed to the continued absorption of supply, which has been positive every year since 2017 (Graph 1). This period, for instance, saw net absorption total almost 1.5 million sq m – the most in any half-year period in recent history. Supported by these tight market conditions, rents grew by 6.8% YoY to JPY4,400 per tsubo. Whilst they remained unchanged over the quarter, annual growth was at the highest level in three years. When looking at the submarkets in more detail, the Tokyo Bay area remains the most expensive by some way. Whilst the scarcity of modern large-scale facilities plays an important role in this trend, rents appear to have found a limit, however. Nonetheless, rental prospects for this submarket remain optimistic. Elsewhere, locations defined by their access to the city centre and proximity to transport links, such as the Gaikan Expressway, continue to attract demand. Rents have duly responded, demonstrating solid growth recently. This has been particularly evident in Saitama Prefecture, for instance, where rents have reportedly surpassed the JPY4,000 per tsubo mark for the first time in over a decade. Vacancy rates in Greater Osaka have recovered remarkably since Q3/2017. To wit, the vacancy rate currently stands at 3.0% – a 10ppts decline over the period and a 1.3ppts contraction YoY. More recently in 1H/2020, despite six of the seven projects completed being fully occupied, completions have exceeded net absorption – for the first time since 2017 – and the vacancy rate has slightly increased as a result. Indeed, this change is attributed to some vacancy in the newly completed ESR Amagasaki Distribution Center. Even so, with leasing activity ongoing this uptick should be temporary. Unlike its Greater Tokyo counterpart, rents in this region have surpassed pre-2009 highs. Specifically, they lie at JPY3,990 per tsubo on the back of a historical 10.2% YoY surge. What’s more, following nine consecutive quarters of annual growth, rents in Greater Osaka are only around 9% below rents in the capital. The spread was as wide as 22% only two years ago, further emphasising the recent improvement in market conditions. The momentum in rental growth observed in both regions is encouraging. That said, tenants in the thriving e-commerce sector represent a part of the overall pool. Indeed, some tenants in other constituent industries such as the apparel and manufacturing sectors continue to suffer. Thus, while rents are expected to continue upward, it is not a foregone conclusion. Looking further ahead, when determining rental growth prospects, it is important to consider how the benefi ts created by the structural changes from e-commerce interact with the ongoing issues caused by a national labour shortage. Indeed, notwithstanding the easing concerns over the latter for now, worries are likely to resurface before long. Click here to view the full report.

The e-commerce boom is one of the major growth drivers.

The overall regional volume declined by almost 40% in Q1 2020 at US$117bn.

Sales from the Rest of Central Region and Outside Central Region continued to dominate this month. Since the opening of showflats from 19 June onwards, Knight Frank notes new sales volume in the private residential market has been steadily increasing each month fuelled by pent-up demand. From 998 units (excluding Executive Condominiums (ECs)) in June, to 1,080 units in July, new homes sales in August totalled 1,256 units, an increase of 16.3% from July and 353.4% from the 277 developer sales in April, which accounted for the lowest monthly volume in 2020 due to the start of the circuit breaker (CB). New home sales in August 2020 was also 11.8% higher than the 1,123 monthly sales in August 2019, and just shy of the highest monthly volume last year comprising 1,270 units in September 2019. Leonard Tay, Head, Research, Knight Frank Singapore, says the Hungry Ghost month did nothing to halt the gaining momentum from “needs-based” purchasers who sold their properties and are now in need of a new home and those getting married. Other buyers whose jobs are not at risk and have substantial savings, could have also purchased a new home for fear of missing out. HDB homeowners who have recently completed their five-year Minimum Occupation Period (MOP) in BTO Flats, could have sold their units and used the gains to upgrade to new condominiums. Here’s more from Knight Frank: Sales from the Rest of Central Region (RCR) and Outside Central Region (OCR) continued to dominate in August with 622 sales and 506 sales respectively, as both new and previously launched projects posted brisk sales. New sales were bolstered by the newly launched project Forett At Bukit Timah in the RCR. One of the first large-scale developments to be launched after the lifting of the CB measures, the 633-unit freehold development in District 21 was the top selling project with 213 units or 34% of the project snapped up during August, attesting to the pent-up demand still evident in the market. Sales have also picked up in earlier launches like The Garden Residences in the OCR and The Woodleigh Residences in the RCR, both of which overtook Jadescape to be among the top five best-selling projects in August. The freehold development Noma, which launched at end-August in the RCR, moved 34 units this month at a median price of S$1,639 psf. Even with buyers’ attention turned towards the RCR and OCR, developer sales in the CCR saw its third consecutive month of uptick. New launches in the CCR included the boutique project Mooi Residences (July 27), which sold its first three units at a median price of S$2,566 all to Singaporean buyers. There were 1,582 units launched in August, almost twice the 869 units launched in July, and more developers will gear up to launch their projects in the remaining months of 2020. Even though new sales volume in the private residential market has been strong in the few months after the circuit breaker, sales momentum for the rest of 2020 might stabilise in the remaining months of 2020. Year 2020 could now end with about 7,000 to 8,000 new home sales in the private market. This is higher than Knight Frank’s previous estimated projection of 6,000 to 7,000 new sales made during the circuit breaker.  

The proportion of income required to meet rent payments decreased to 23.3% in the June quarter.

Sydney saw the sharpest decline in Q2 2020 at 8.6%.

Vacancies fell from 6.5% in 2015 to 0.6% in Q2 2020.

The USD11.7b worth of transaction volumes in Q2 reflect fundamental strengths in some APAC markets.

Rents are expected to grow by between 3.3% and 2.2% on average per annum for the next five years.

Logistics has remained resilient with over US$7bn in capital raised in the last six months.