[+] Crime, Collapses and Clean Energy: A Big Quarter Unpacked

Halfway through 2024 Australia’s property sector is well on its way to eclipsing its 2023 cross-border capital flows with the Asia Pacific leading the charge. The nation’s fortunes are tightly tied to those of the nations in the Asia-Pacific region but this relationship is writ largest in the property and development sector. According to MSCI Real Capital Analytics data Australia attracted $6.8 billion in cross-border capital flows in 2023. And in the year-to-date data for 2024, at the end of the second quarter the property sector had already attracted $5.4 billion in capital. About 30 per cent of this capital has come from Japan, chalking up about $1.66 billion or 30 per cent of all cross-border transactions according to MSCI Real Capital Analytics. The top five international buyers in Australian property are Singaporean firm GIC, Mitsubishi Estate (Japan), Barings (US), Mitsui Fudosan (Japan) and PAG Asia (Hong Kong). ▲ Mitsui Fudosan has taken a 66 per cent interest in Mirvac's office project at 55 Pitt Street in Sydney. But taking a more macroeconomic view, there are a number of key policy changes that impact the net inflow of capital into Australia’s property market. What happens in the Asia-Pacific region also provides a look ahead at the trends that may emerge in Australia or the movements and opportunities that exist for Australian businesses willing to try their hand outside the country’s borders. The Asia Pacific property sector has leaned into renewable energy and big infrastructure projects in the second quarter of 2024, and Aussie firms are also stepping into the fray . The big shifts Sustainability has emerged as a key concern for many nations in the region. SolarDuck, a company specialising in offshore floating photovoltaic plants, has set up offices in Tokyo, Japan, while Singapore-based Cyan Renewables and robotics company Ocean Infinity have formed a partnership to set up offshore renewable projects across the region. Meanwhile the Maldives has paused all coastal development projects including its first eco-city project, Ras Malé, and another land-reclamation project, Hulhumale, citing climate change challenges. Maldives President Dr Mohamed Muizzu has called for new funding mechanisms to address climate resiliency, citing visible impacts and changes in climate conditions. ▲ Maldives President Dr Mohamed Muizzu overlooking the reclamation work, which has now been halted, for the new eco-city. Brookfield and Microsoft have also inked a five-year deal to help Brookfield deliver 10.5gW of renewable energy through different projects between 2026 and 2030 in the US and Europe so that Microsoft can rely on 100 per cent renewable energy by 2030. However, the agreement contains the scope to extend to the Asia-Pacific region after 2030. China has joined the trend, showing off its new hydrogen fuel cell hybrid trains at the Asia-Pacific Rail 2024 exhibition in Thailand in May. ▲ China’s foreign policies include assisting other nations with developing infrastructure such as hydrogen fuel cell hybrid trains and networks. Japan is focused on reducing the nation’s flood risk. Some areas have opted to rely on evacuation measures alone as limiting development is a barrier to increasing population growth in the nation where the population is in decline. The Asian Development Bank has helped Phillippine-based renewable energy developer Alternergy Holdings Corporation (AHC) to secure its first green corporate loan for $US34.4 million in the initial tranche with BDO Unibank Inc as the lender and BDO Capital as the lead arranger. It has also partnered with the Canadian Government to create a $US255-million fund to drive climate transition plans for private sector firms in Asia, hoping to help reduce the financing risk of projects. The deals Marriott International has made a series of moves to ink deals for hotels across the region, starting with one with IFF Holdings in Vietnam. The deal is for Marriott to open a 232-key Luxury Collection Resort and Spa branded hotel Arbora at Quang Nam, Da Nang, and 137 residences at the same location, with an opening date of the second quarter of 2026. Hilton has moved quickly as well, signing deals for 11 properties across Thailand, Vietnam and Indonesia and is expected to have more than 1000 hotels trading under its brands in the region by 2025. The CBRE Asia-Pacific Hotels and Hospitality Sector Trends report shows that nearly half of all hotel rooms in the region’s development pipeline are from five major groups: Marriott (60,566 rooms), Accor (47,052 rooms), IHG (34,227 rooms), Hilton (31,606 rooms) and Wyndham (21,455 rooms). ▲ Hilton has signed deals for 11 new hotels, including the KROMO Bangkok, Thailand. Growth markets Global ratings agency Moodys has announced that India is the fastest-growing economy in the region with an increase in its real GDP of 8.2 per cent over the past financial year. Moodys has put this down to India’s policies around developing infrastructure and encouraging private sector investment. While China’s property sector recovers, many Chinese construction companies have followed a long-held plan of looking overseas for work with deals made at the recent China-LAC Forum. Latin America is China’s third-largest market for engineering and construction work, often on large infrastructure projects with total signed contracts estimated at more than $US280 billion. The work falls in line with China’s Belt and Road Initiative, a plan that has been in place since 1995, where China builds a network of ports, railways and other infrastructure for countries across the globe to allow it cheaper access to goods and services, often in deals with development loans that see the Chinese Government take on 99-year leases for the ports built by Chinese construction firms. It is working on Sri Lanka’s Colombo Port City project, with ports in Pakistan, Russia, Indonesia and Malaysia and similar infrastructure projects in several African nations. East Coast Rail Link project, Malaysia ▲ The infrastructure project in Malaysia is funded by China, who wants it to link with Chinese-funded rail projects in Laos and Thailand. China announced in June it was researching plans to connect Malaysia’s $10-billion East Coast Rail Link to other projects it had funded or helped construct in Laos and Thailand. Malaysia’s East Coast Rail Link is due to be completed by 2026. The approvals Australia-based engineering and construction firm CIMIC Group has won approval for 11 projects across the region through its subsidiary companies in the second quarter of 2024. CIMIC’s Leighton Asia has secured data centre projects in India and Indonesia, a waterworks project in Singapore, and a hospital expansion project in Hong Kong. Its CPB Contractors have been selected for the redevelopment of the Royal Prince Alfred Hospital in New South Wales’ Camperdown, and are also part of a consortium with another subsidiary, Sedgman, on a $757-million contract for a Western Australian mining project. Another subsidiary, UGL, will operate passenger trains in Melbourne while its Pacific Partnerships has secured the development rights for one of Australia’s largest solar farms and battery projects, the 700mW Cobbora Solar Farm in NSW. In Hong Kong, the Airport Authority Hong Kong has awarded a tender for an autonomous transportation project, the Airportcity Link between the Hong Kong Port and the Hong Kong-Zhuhai-Macao Bridge and the retail and leisure centre SKYCITY at the Hong Kong International Airport. In Malaysia, Logos and UEM Sunrise have paired up to build a data centre campus in Johor State with a capacity of up to 360mW while Bridge Data Centres has announced plans for a 180mW data centre south of Kuala Lumpur. BASF and Mingyang have received approval for their 500mW offshore wind farm project at Zhanjiang in China’s Guangdong province. It will be BASF’s largest project when completed in 2025 and is expected to be worth $US10.8 billion. Meanwhile in Australia, the industry is grappling with moves to weed out corruption within one of the nation&rsquo;s most influential unions, the CFMEU . --> Data, markets and opportunities The CBRE Global Data Centre Investor Survey showed that more money is going towards data centres within the region . Almost 97 per cent of those surveyed had plans to increase their investment in data centres in 2024 with about 44 per cent saying they would allocate more than $US500 million compared to just 32 per cent last year doing so. The survey pinpointed Tokyo, Sydney, Singapore and Seoul as the key locations for investment, according to CBRE Pacific data centres capital markets director Darcy Frawley. “Insatiable demand from major occupiers for data centre consumption, especially in the Cloud and AI sectors, has driven the growth of the asset class,” Frawley said. “Australia specifically is set to see a large gap between capacity and demand in the medium term, which will lead to significant rental growth and make the sector even more appealing for data centre investors.” Crime and collapses Major trials have dominated the news cycle each quarter in the region so far, starting with the Evergrande trial at the end of January. But in the second quarter, all eyes turned to Vietnam as Truong My Lan, chair of development firm Van Thinh Phat Holdings, was sentenced in April in Ho Chi Minh City to death for fraud. About $12.5 billion was reported to have been embezzled, up to nearly 3 per cent of Vietnam’s gross domestic product, with the damages increasing that sum to a reported $27 billion. Lan was found guilty of embezzeling the Saigon Central Bank and was tried alongside 85 others. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Crime, Collapses and Clean Energy: A Big Quarter Unpacked

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