[+] Neighbourhood Watch: Big Start to 2024 for Asia-Pacific

While Australia tends to capture the lion’s share of investment in the Asia-Pacific , others are seeing a bigger picture. While many in the property sector might view the Asia-Pacific region purely in terms of Australian investment , others are seeing a bigger picture. --> And as 2024 gets into top gear, the region is producing lucrative opportunities investors and developers are eyeing with interest. Those taking up opportunities in the region outside Australia include developer heavyweights Goodman Group and, both of which are expanding into the region, including Goodman establishing a Singapore office, while Hines has made moves into the Land of the Morning Calm. “South Korea is an important growth market for Hines,” Hines Asia-Pacific chief executive Ray Lawler said as he revealed plans for a tech hub in the country last year. The Urban Developer has compiled this report into the market movements and key events in the Asia-Pacific region for the beginning of 2024. The big shifts All eyes were on the Evergrande trial as January ended as the company’s death knell was finally sounded just months after it announced its chief executive was being investigated and negotiations with its offshore investors’ group of creditors fell apart. Most notably, the Chinese and Hong Kong judiciaries had pre-emptively made an arrangement that judgements would apply across both jurisdictions. The Chinese Government immediately made moves to prevent the stock market falling as shares in Evergrande were sold off. Also making news was Google as it announced it would join the Humboldt project to connect Chile to Australia via a new subsea cable that would benefit connectivity across the region. It would also mean savvy investors could position themselves to take advantage of what the cable could offer as interest in data centres booms. And South Korean telecommunications company KT announced a signed agreement with companies in Indonesia, Japan, the Philippines, Malaysia and Vietnam to build a submarine fiber optic cable to help support the demand for data and cloud services . The ALPHA project will connect all partnering countries in a network. The deals Global data centre player Equinix has inked an agreement with TagEnergy for the first Power Purchasing Agreement (PPA) for the Asia-Pacific region, which will deliver it 151mW from Australia’s largest wind farm, Golden Plains Wind Farm, Victoria, by 2029. “This first PPA in Asia-Pacific is a huge milestone for Equinix. It underscores our longstanding commitment to actively and meaningfully achieve Equinix’s global sustainability targets to drive positive change and foster a more sustainable future for data centres,” Equinix Australia managing director Guy Danskine said. Developer PGIM Real Estate has agreed to buy Hong Kong-based Ovolo Group’s boutique hotel The Sheung Wan for $62.7 million, which will be its third acquisition in Hong Kong after it converted two hotel purchases of 2022 into co-living apartments. ▲ PGIM has acquired The Sheung Wan hotel by Ovolo Group in Hong Kong. Singapore’s Hiap Hoe sold Melbourne’s Four Points by Sheraton hotel in Docklands to MA Financial for $63 million this year, while Singaporean property giant City Developments has acquired even more ground in London after it bought a $170-million, 17-storey build-to-rent project, Yardhouse, from Bridges Fund Management. An agreement has been reached among Hyatt Hotels Corporation, Hangzhou Trade and Tourism Group and Zhejiang Dragon Hotel Managment Group to expand Hyatt’s Independent Collection hotel brand in China. More than 60 new hotels are planned for the next decade with the first a Hyatt Place hotel in Hangzhou. ▲ City Developments Limited has acquired another UK-based property in London, The Yardhouse, in White City. BlackRock’s Climate Finance Partnership (CFP) has made a deal with Malaysia-based Ditrolic Energy Holdings to build solar assets and infrastructure across the region with projects already in Malaysia, Bangladesh, China and other South-East Asian countries. CFP secured $US673 million in funding from partners keen to invest in the region that currently accounts for 40 per cent of global carbon emissions. BlackRock has also recently acquired GIP, giving it ownership of many major Asia-Pacific infrastructure assets, including Sydney Airport, Port of Brisbane and the Port of Melbourne. New York-based firm KKR is gearing up for a wave of acquisitions in the region this year after closing out its KKR Asia-Pacific Infrastructure Investors II fund, which netted $US6.4 billion. KKR infrastructure head of Australia Andrew Jennings said the fund would focus on India, Philippines, Korea, Japan, Australia and New Zealand. “We think the demand for Asian infrastructure is only increasing—Asia accounts for 60 per cent of global growth driven by domestic consumption and productivity, continuing urbanisation and, like we’re seeing elsewhere in the world, a deep push into digitalisation and decarbonisation themes,” Jennings says. “I think there’s also an increasing greater public acceptance of private capital in Asia, so we’re seeing that there are also greater investment opportunities.’’ Getting under way Brookfield’s DCI announced it has started work on its first data centre in Seoul, South Korea, with conglomerate Daelim. Goodman Group broke ground on a 50mW data centre in Hong Kong and a 1000mW campus in Greater Tokyo as it makes itself known in the region’s data centre sector. ▲ Goodman’s data centre in Hong Kong—the Goodman Tsuen Wan West precinct. “We continue to witness a robust development pipeline with 3.9gW under construction throughout the region and 9.4gW in planning stages,” Cushman and Wakefield’s data centre advisory lead Australia, Alex Moffatt, says. “Hyperscalers and major operators are undertaking multibillion-dollar self-build programs across the region,” he says. “In addition, Blackstone and similar funds have committed to investing billions in data centres globally including the APAC region. Sovereign wealth funds are also investing in the region with mandates to secure assets throughout APAC.” The policies Still trying to revive its housing market with the property sector integral to its domestic economy, China has been issuing policies to assist co-ordination between local governments and financial institutions. Both its housing ministry and its financial regulator have announced the establishment of a mechanism to respond to real estate projects’ financial needs in a more precise manner. Its liquidity crisis has been ongoing since mid-2021 with the Evergrande court ruling the most recent event in a line of developers defaulting, falling over and delaying debt repayment. The moves Global asset management firm BlackRock has appointed former BlackRock Australasia head Jason Collins as head of Australia and Susan Chan appointed as head of Asia-Pacific. Cameron Garnsworthy and Martin Hay have been appointed as the managing director and chief development officer for SunCable Australia, respectively. SunCable Australia is attempting to drive the export of solar energy from northern Australia to Singapore. Lucy Mallick has moved to Colliers Singapore as the firm addresses increased demand from investors keen on Australian assets. Knight Frank has appointed former Lendlease executive Alice Crowley as its new head of international capital in its Singapore office. ▲ The Sun Cable project will supply Darwin with solar energy and then export it to Singapore. Data, markets and opportunities CBRE’s 2024 Asia-Pacific Investor Intentions Survey predicts that more than 40 per cent of Asia-Pacific investors will be keen to sell off assets with the office sector predicted to be hit the worst. The survey polled more than 510 investors across the region in November and December of last year. Meanwhile, JLL’s Global Real Estate Sector Outlook report says that in comparison to other regions, the office sector is more stable with India, bolstered by the tech industry, likely to lead demand and growth. “Occupiers will continue to be cautious in China but activity should improve in the second half of the year, supported by new supply and tenant-favourable conditions,” the report says. “With a record supply pipeline regional vacancy will rise incrementally while rental growth is forecast to remain flat on average over the year.” It also expects the region’s logistics market to have moderate growth in net absorption and rental rates with post-pandemic recovery and tourism activity boosting rental growth and sentiment in the retail sector. The JLL report also predicts a growth in multi-generational living, co-living, senior housing and student accommodation in China, Australia and elsewhere in the region due to chronic undersupply, urbanisation and, globally, the least affordable homeownership rates. Slow construction starts due to rising costs is also a factor. Hines chief investment officer Asia Chiang Ling Ng agrees that the multi-generational-living sector presents key opportunities with Hines acquiring five sites in Tokyo and Kyoto in 2023. “The multi-family rental sector in Japan is a resilient non-discretionary sector in the Asia region and contributes as a stabiliser in a blended core-plus strategy,” Ng said. The Hines Asia Property Partners Fund now has 16 multi-family assets and is expected to have $US1 billion in asset value within the next three to five years. With construction growing across the region, the construction chemicals market has boomed, according to Dublin-based Research and Markets’ Asia-Pacific Construction Chemicals Market Size and Share Analysis (2023-2028) report. It predicts that the market will grow from $US27.56 billion in 2023 to $US37.81 billion by 2028. NAB’s China economic update for February 2024 said that China’s Three Red Lines policy (restricting lending to the property sector) in mid-2020 and the 2022 mortgage strike has significantly impacted supply and demand with new construction starts in December 2023 nearly 70 per cent below their 2020 peaks and sales nearly 50 per cent lower. It also expects the downturn to last some time with 96 per cent of Chinese households owning at least one property and more than 20 per cent owning multiple properties, plus a suggested urban residential vacancy rate of more than 20 per cent. Currently, it seems that opportunities lie in what is now known as commercial residential— the sector encompassing multigenerational living, student accommodation and built-to-rent projects, and the alternative assets sector as many developers pivot to infrastructure projects, data centres and energy projects. Investors keen on Australia are looking at preciesly the same sectors here. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Neighbourhood Watch: Big Start to 2024 for Asia-Pacific

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