Global Market Trends

Quarterly Vantage Point - Q3 2021

Read up on past Vantage Points to find out the hottest news during the period of Q3 2021.

RealVantage

30 Sep 2021 • 15 min read

Read up on past Vantage Points to find out the hottest news during the period.

July 2021

Office Market Transactions Continue to Gain Pace, While Real Estate ETFs Experience Surge of Capital Inflow

Melbourne’s office market is back in business, according to JLL’s preliminary results for this quarter showing almost $1 billion in sales, double the previous quarter’s transactions. The research shows this has been the strongest quarter for the Victorian commercial office sector transactions since 2019, before the Covid-19 pandemic sent the state into a series of lockdowns. Elsewhere, in Hong Kong, the real estate market is gathering steam led by a bounce in residential assets.

Meanwhile, swelling real estate prices in the U.S. have sent investors pouring into exchange-traded funds (ETFs) tracking the industry's gains with some funds beating the S&P 500. The sector's ETFs are on pace for their best month of inflows since at least 2014, with almost US$3.9 billion added this year. As workers start returning to the office, shoppers re-enter stores and restaurants start filling up, the demand for a wide range of properties is rising.

Office Deals Double in Melbourne CBD Market

The Urban Developer – The Melbourne office market recorded $985.9 million in transactions for the second quarter of 2021, almost double the previous quarter’s $412.5 million, in a sign that the market had become buoyant. Despite strong investor sentiment, research from Cushman & Wakefield indicates CBD office rents are at their lowest ebb, but the decline has started to slow.

Billions Flood into Real Estate ETFs with Property Boom

The Business Times – ETFs tracking the real estate industry are seeing record capital inflows, with almost US$3.9 billion added, according to data compiled by Bloomberg. BlackRock's iShares US Real Estate ETF (IYR) has already taken in US$2.5 billion. Vanguard's Real Estate ETF and BlackRock's IYR have each gained about 20 per cent this year, compared to 13.6 per cent for the S&P 500.

Smart Warehouses Spread to New Markets

JLL – Urban dwellers and their expectations for fast online deliveries are spurring the spread of smart warehouses, which are expected to grow at 14 percent, reaching US$30 billion by 2026. The U.S. is currently leading the way, but less-established markets are catching up, with Indonesia, Australia and the Philippines all building warehouses with high-tech standards.

Hong Kong’s Real Estate Deals Jump to 24-year High in First Half Buoyed by Upbeat Economic Sentiment

SCMP – Hong Kong’s real estate market is gathering steam. Total transactions in Hong Kong’s property sector surged to a 24-year high in the first half, led by a bounce in residential assets, as investors piled into the market amid the economic recovery. Secondary housing topped the list, accounting for nearly 60 per cent of the turnover.

CapitaLand Selling Stakes in $7.2B China Raffles City Portfolio to Ping An

Mingtiandi – Singapore’s CapitaLand has agreed to sell partial stakes in six of the nine mixed-use Raffles City developments in China to mainland insurance giant Ping An. Net proceeds from the sale — which include slices of combined retail, office and residential projects in Shanghai, Beijing, Hangzhou, Ningbo and Chengdu — is expected to exceed S$2 billion (US$1.5 billion).

Housing Prices Continue Their Upward Ascent While Grade A Office Demand Gains Traction in Singapore

Housing markets across the globe, particularly in richer countries, continued to gain, with the OECD's housing unaffordability surpassing 2008's levels, according to Bloomberg. In Australia, housing prices were supported by strong new loan value commitments, falling vacancy rates, and improvements in the labour market. In the UK, house prices rose at the fastest pace since the mid-2020s, sparking fears that this could dampen trade by crowding out export-heavy manufacturers.

The Grade A office market in Singapore has been given a rosy outlook by Cushman & Wakefield, who are projecting a huge increase in demand for 2021. Although vacancies continued to increase due to a net oversupply, rents for Grade A office spaces have registered their first uptick after five straight quarters of decreases.

Housing Prices ‘Up-Crash’ Tipped to Continue

The Urban Developer – Investor lending for housing in Australia has hit a six-year high, supporting predictions that price increases in the sector will continue. New loan value commitments for investor housing rose 13.3 per cent month-on-month, a 116 per cent increase since May last year, according to the Australian Bureau of Statistics.

UK Housing Boom May Derail Post-Brexit Trade Dreams

Reuters – History suggests Britain's house price surge could threaten hopes of post-Brexit export-powered growth, if the housing market is used to fuel the economy. House prices are rising at the fastest annual rate since 2004, by 13.4% in June. The booming sector is causing concerns that labour and capital would be pulled from higher-productivity industries such as manufacturing and therefore, affecting exports.

Morgan Stanley Downgrades China's Property Sector

The Business Times – Morgan Stanley downgraded its outlook on China's property sector amid risks that policymakers may take steps to cool down the overheated market and further prompt developers to cut their debt levels. The US brokerage lowered its recommendation on the real estate sector to "in-line" from "attractive" in a note on Thursday, writing that they expect government property policy to remain relatively tight, and that cities with overheated markets may need to tighten further.

CBD Grade A Offices' Net Demand Turns Positive, but Vacancies Rise Again

The Business Times – The full-year net demand for Grade A office space in Singapore's central business district (CBD) for 2021 is likely to be up to six times that of 2020, Cushman & Wakefield has forecast. This comes as net demand in the first half of this year turned positive, at 68,000 square feet. However, vacancy rates of CBD Grade A offices have continued to increase as net supply outpaced net demand.

Logos and Partners Ink $1.7B Deal to Acquire Sydney's Moorebank Logistics Park

Mingtiandi – A consortium led by Logos Property has moved a step closer to buying Australia’s largest intermodal logistics facility for $1.67 billion after signing a binding agreement with the owner, logistics operator Qube. The acquisition, which is subject to various approvals, will increase Logos Property's Australian and New Zealand assets under management (AUM) to $11.5 billion after the transaction closes which is likely within the next three months.

Australia and New Zealand Top the World's Most Liveable Cities, and Buying Homes Cost Less than Renting in Some Cities

This year, in the Economist Intelligence Unit’s ranking of the world’s most liveable cities, Australia and New Zealand take six of the top-10 spots. Auckland took the top spot, thanks to New Zealand’s rapid response to COVID-19, allowing life to return to normal sooner than the rest of the world. House prices in Auckland leapt about NZ$140,000 (US$131,000) on average in 2020. Meanwhile, Wellington took the fourth spot and Australia's four major cities - Adelaide, Perth, Melbourne, and Brisbane - made it to the top-10 ranking.

Indeed, the demand for new homes across Australia increased by 15.3 per cent driven by owner-occupiers. Despite this strong demand, data from The Weekly Property Pulse showed that buying cost less than renting at 36.2 per cent of properties across the country, up from 33.9 per cent last year. Elsewhere in Singapore, according to a Knight Frank report, data for the second quarter of this year saw a total of $5 billion worth of investment deals transacted by both retail and institutional investors, a significant 127.3% jump year-on-year in the same period, showing further an improved outlook in real estate investment.

Why the Most Liveable Cities are in Australia, New Zealand

JLL – The pandemic’s influence on quality of life has pushed cities in Australia and New Zealand to take six of the top-10 spots in a coveted annual ranking. Auckland took the first position in the Economist Intelligence Unit’s ranking of the world’s most liveable cities in 2021. Adelaide (3rd), Wellington (4th), Perth (6th), Melbourne (8th) and Brisbane (10th) also made the top 10.

U.S. Homeowners Have Another Chance to Refinance as Mortgage Rates Fall Again

CNN – Homeowners who missed out on the lowest average interest rate on a 30-year fixed rate mortgage earlier this year may have another chance. The average interest rate on a 30-year fixed-rate mortgage fell to 2.88%, and the 15-year fixed-rate mortgage dropped to 2.22%. The downward slide could pull some weary buyers back into the market with low rates.

Third of Australian Homes Cheaper to Buy than Rent

The Urban Developer – Homes across Australia are generally cheaper to buy than rent. The Weekly Property Pulse showed buying cost less than renting at 36.2 per cent of properties across the country, up from 33.9 per cent last year. The report comes as demand for new homes increased by 15.3 per cent driven by owner-occupiers while rent went up in places experiencing strong domestic migration.

Property Investment Jumps 127% Year-On-Year in 2Q2021

EdgeProp – Real estate investment sales in Singapore in 2Q2021 improved on the back of strong land sales and a rebound in demand from retail and institutional investors, according to a Knight Frank report. The quarter saw a total of $5.0 billion worth of investment deals, a 127.3 per cent year-on-year increase compared to the $2.2 billion recorded in the same period last year.

Transitory Inflation is Just Part of the Covid-19 Recovery

Forbes – Inflation is a buzzword these days. Headlines about it are everywhere and there are questions about it left and right. It is probably the first time in a decade that the topic is discussed in a serious way. The attention makes sense though since recent CPI numbers have been above expectations, which were already elevated as much of the world come out of the Covid-19 lull.

UK's Biggest Homebuilder Reports Record Profits, Cooling Measures Sought for Swedish Housing Market

As house prices around the world continue to trend upward, the effects are being felt not just by home buyers, but also by homebuilders as well, albeit more positively. The UK's biggest housebuilder, Barratt Developments, expects a record profit after a stellar year fuelled by insatiable demand due to UK's stamp duty relief. In Sweden, the red-hot market is causing concerns that a bubble is forming, reigniting calls for some government intervention for cooling-off measures.

In other real estate segments, the pandemic has also caused fundamental changes in workspace demand and usage. With work-from-home being the norm for most of the past 18 months, tenant sentiment has changed towards one that favours both flexibility and choice. As a result, co-working spaces are now more in-demand due to shorter leases, flexible spaces, and friendlier exit clauses.

Barratt Expects Profit of More Than GBP £800m Amid Housing Market Boom

The Guardian – Barratt Developments, Britain’s biggest housebuilder, has forecast that it will make more than £800m in annual pre-tax profits, as it benefits from the housing market boom and buyers’ rush to complete purchases before the end of the stamp duty holiday. The housebuilder also highlighted an increase in sales of larger family homes, and further said that completion levels have bounced back from the pause in construction due to the pandemic.

Europe's Frothiest Housing Market is Making Politicians Nervous

The Business Times – A rally in Swedish house prices that has made its housing market one of the world's frothiest is reigniting political calls to remove a controversial tax perk seen as part of the problem. The housing rally there mirrors property booms from Canada to New Zealand, and was ranked by Bloomberg Economics in the past month as Europe's bubbliest. Such dynamics are pushing the Swedish monetary authorities to explore options to cool the market.

Sales of Existing Homes in the US Rise Slightly as More Listings Finally Hit The Market

CNBC – After four straight months of declines, sales of previously owned homes rose 1.4% in June to a seasonally-adjusted annualised rate of 5.86 million units, according to the National Association of Realtors. The declines were mainly due to a lack of supply, which also pushed the median price of existing homes to an all-time high of $363,300 in June, 23.4% higher than in June 2020.

The Future of the Workplace

Savills – 18 months into the global pandemic, sentiments on workspaces have changed towards one that is based on flexibility and choice. Co-working spaces have seen increase in demand, due to such offices offering companies and organisations an opportunity to de-risk their real estate portfolio with shorter leases, more flexible spaces, and easier get-out clauses. These have become particularly attractive due to the prolonged work-from-home period which is still ongoing in many countries.

Brisbane Celebrates 2032 Olympic Games Win

The Urban Developer – Brisbane has been announced as the host city for the 2032 Olympic Games, providing a catalyst for a massive AUD 5 billion infrastructure programme across Queensland’s south-east region. The Olympic Games are also expected to provide AUD 8.1 billion in economic and social benefits as well as 91,600 full-time equivalent jobs.

August 2021

Australia Reports Massive Expansion of Residential Lots, Rising Wave of Capital Chasing Data Centres in APAC

In an effort to catch up to the insatiable demand and soaring prices for new homes in Australia, the Queensland Government has made a whopping 50,000 residential lots available for sale to spur development and job creation, supporting the race for housing supply's chase to catch up with expansive housing demand.

In APAC market, quality data centres are increasingly challenging to find as more capital competes to grab a piece of the action. The growing demand stems from the surge in cloud services provided by some of the world's biggest tech firms, whose revenue has grown by a range between 32 percent and 50 percent year-on-year in the first quarter of 2021.

Queensland Unlocks Land to Meet Demand

The Urban Developer – The Queensland government has unlocked nearly 50,000 lots between the Gold Coast and Sunshine Coast as population growth pushes up demand. Land supply was part of the state’s Covid-19 economic recovery plan to provide jobs as property prices continue to surge across the region.

International Buyers Dropped Out of U.S. Housing During Pandemic, but China is Rushing Back

CNBC – U.S. homebuyers went on a buying spree during much of the coronavirus pandemic’s first year. International buyers did just the opposite, though. Even with virtual options in place for property tours, sales of U.S. homes to foreign buyers fell by 31% from April 2020 to March 2021. International buyers purchased 107,000 properties, marking the lowest unit volume and lowest dollar volume since 2011.

What's Next for Data Centres: A Wave of Capital Investment in APAC

Mingtiandi – As surging demand for cloud services from big companies and state agencies drives growth in Asia Pacific data centres, regional capital is building platforms and incubating start-ups eager to grab a piece of the action. So far, a few operators have achieved region-wide scale with their data centre networks, and quality sites are increasingly hard to acquire in APAC.

Keppel Divests Stake in Chengdu Real Estate Firm for SGD 324 Million

The Straits Times – Keppel Land China will divest 100 per cent of its equity interest in Chengdu Shengshi Jingwei Real Estate through its subsidiary Hillwest for approximately RMB 1.6 billion (SGD 324 million). Chengdu Shengshi will no longer be a subsidiary of Keppel following the completion of this divestment. The conglomerate expects to recognise a gain of about RMB 668 million.

Tesla Setting Up Shop at Toa Payoh Lorong 8 Property with Lease Term of Up to 20 Years

The Business Times – Electric car maker Tesla has leased a building in Toa Payoh Lorong 8's industrial area for its showroom, corporate office and service centre. This was announced on Thursday by private equity real estate investment manager Firmus Capital, which acquired the property and has entered an agreement to lease it entirely to Tesla's Singapore subsidiary for a period of up to 20 years.

U.S. Residential Real Estate Flourishing Amid Market Crash Outlook, Australia's Housing Development Frenzy

Although the U.S. government recently reported an increase in housing inventory, the market might have to wait to feel the impact, as the jump was driven by yet to be built homes. Housing market momentum is expected to slow given surging prices and tight supply, however economic indicators are not pointing towards a crash, but instead towards sustained growth.

Read also: Market Selection in Real Estate - RealVantage’s Approach

Australia's housing market has also showed no signs of slowing, with New South Wales experiencing an abundance of new housing developments. Singapore has also contributed significantly to the strong growth in Australia, and are now the second-largest buyer of Australian real estate, and third-biggest source of foreign investment for Australia.

U.S. New Home Sales Creep Up; Supply, Prices Remain Constraints

Reuters – Though the U.S. Commerce Department reported a big increase in new housing inventory, the jump was driven by a record rise in homes that are yet to be built. Builders are taking longer to complete houses, hobbled by expensive raw materials as well as scarce land and workers. High prices and backlogs in construction are also expected to temper sales in the coming months, according to Oxford Economics.

Is Residential Real Estate Headed for a Crash?

Forbes – Whether the housing market is headed for an imminent crash has been discussed extensively given recent meteoric rises in prices. However, considering the housing market's economic indicators, the housing market is actually looking optimistic. Rapid increases in housing prices are not behind headline inflation figures, and housing demand is consistently outpacing supply.

New Developments Explode Across Sydney’s Fringe

The Urban Developer – There is a huge number of new masterplanned communities in various states of development across New South Wales (NSW), with areas to the north-west and south-west of Sydney experiencing the greatest activity. Civil works and construction are under way across a large number of new estates, while in other areas, land parcels are being released to the market in stages.

Singapore Has Bought Almost AUD 20 Billion Worth of Australian Real Estate in the Last Two Years, Eclipsing China

Business Insider – Singapore investors bought up AUD 19.3 billion worth of Australian real estate in the two years to July 2020, AUD 6.1 billion more than China. Singapore is now the second-largest buyer of Australian Real Estate, behind only the United States. The investments were led by institutional investors such as GIC, however individual home buyers also made up a significant portion.

One in 10 London Offices Are at Risk of Becoming 'Obsolete' Under New Energy Rules

CNBC – Under new energy standards set to be introduced in 2023, buildings in England and Wales with an energy efficiency rating lower than ‘E’ will not be able to close new leasings. The upcoming measures come as part of broader government efforts toward carbon neutrality. Approximately 20 million sq ft, or 10% of London workspace, are not currently compliant with the new standards.

Vantage Point is a curated cache of the latest trends in real estate investing repurposed from media outlets and websites around the globe. Each article is a succinct wrap-up of key news points for an easy read. Outbound links, embedded in each editorial, are attributed to original external sources. RealVantage makes no warranties or representations regarding the accuracy, completeness or veracity of the information or data contained in such external sources. Editorials under the Vantage Point vertical do not reflect the views of RealVantage, in part, or in its entirety.

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