asia real estate 2013 forecast

Asia Real Estate2013 Forecast

ContentIntroduction

Section 1 - Asia Real Estate 2013 Forecast • Office:Drivenbycost-savingsandthecontinuedflighttoquality • Residential:Citieswithpent-updemandwilldowell • Retail:Poweredbygrowingurbanisation • Industrial:Intra-regionaldemandspilledoverfromChina

Section 2 - MarketsGreater China • Beijing,China • Chengdu,China • Guangzhou,China • Shanghai,China • HongKong • Taipei,Taiwan

North Asia • Tokyo,Japan • Seoul,SouthKorea

Southeast Asia • Jakarta,Indonesia • KualaLumpur,Malaysia • Karachi,Pakistan • Manila,Philippines • Singapore • Bangkok,Thailand • HoChiMinhCity,Vietnam • Hanoi,Vietnam

India & Central Asia • Bengaluru,India • Chennai,India • Mumbai,India • NCR(Delhi,NoidaandGuragon),India • Kazakhstan

Colliers international isdelightedtopresenttheAsiaRealEstateForecast for2013.Thesummarysectionofthepaperprovidesthetop-downanalysisonthekeytrendsinmacro-environmentinAsiaaswellastheprospectivetrendonthemajorpropertysectorsintheregion.ThecountrysectioncoversmajorcitiesinAsiawithpropertyforecastandprojectionsonbothrentalandcapitalvaluesfor2013.

Asasnapshot,oneofthenotabletrendsin2013isthatrealestatepriceswillremainpositivein2013.Moreoccupiersareexpectedtogoforacquisitionratherthanleasingamidthecontinuedsurgeinrentals.Officetenantswouldtakethesupplycycleinindividualcitiesasanopportunitytoupgradethemselvestobetterqualitypremises.

Itrustyouwillfindtheresultsofthispaperofinterest.

Colliers International 5Asia Real Estate 2013 Forecast

In2013,realestateprices intheregionarepredictedtostay intheupwardtrendnotjustbecauseoftherisingpricesofcommoditiesincludingsomeconstructionmaterialsfromthereplacementcostanglebutalsothegrowthexpectationsintheregionandtheunderlyingdemandfromend-users,occupiersandinvestors.

LookingattheprospectiveGDPgrowthintheregion,Chinaisgoingtobethekeydriverwhichispredictedtogenerateasignificantpositivespill-overtotherestofcountriesinAsia.Shortlyaftertheconclusionofthe18thNationalPeople’sCongress in4Q2012,economicgrowthofChinain2013ispredictedtobestronger.Themainreasonisthatmassive investmenthasbeenmade inanumberof infrastructureprojectswhichwilldefinitely drive growth.Meanwhile, the prevailing relaxedmonetary policy is going tosustainin2013giventherateofpriceinflationhasbeenstayingatlowlevel.Comparing2013to2012,theonlydifferenceisthatthegrowthrateofrealestatepricesisexpectedtotaperoffslightlyfromtherangeof5-9%peryearin2012to2-5%peryearin2013.

Asia Real Estate 2013 Forecast

Real estateprices for 2013 remain positive

Furthertothegeneralfallofinvestmentyieldsin2012,thesameisgoingtohappenagainin2013acrosstheboardbutthedegreeofcompressionwillbemuchslowerbetweenflatand10basispoints.Ontheonehand,occupiersareexpectedtotakeadvantageoftheprevailing low-interestrateenvironmenttoacquirerealestate for long-termoccupationratherthan leasing.Ontheotherhand,investorswhohavepreviouslybeenconstrainedbylimitedloan-to-valueratiosareexpectedtotakeonmorerisksincompletingdealsgiventhesupportbymostbanksandother lending institutionsonbothcoreandmezzaninerealestatefinancingin2013.

Renters becomebuyers; Yieldsto compress


Breaking down by sector, the office sector is going to seemore rentalweakness primarily because of the impact arising from thecurrentsupplycycle.Although individualoccupiersmighttake itasanopportunitytorelocateandupgradetobetterqualitybuildings,theintroductionofnewdevelopmentsisgoingbringdowntheaverageoverallrentalratesatleastovertheshortterm.Moresignificantdownwardpressurewillbeinevitableincitieshavingplentifulvacantspaceavailableforimmediateoccupation.Forexample,citiesinIndiawhereexistingvacancyisontheorderof15-20%aregoingtoexperiencearentalcorrectionof2-3%in2013.Meanwhile,Singaporewillcontinuetoseeamplenewdevelopmentscomingonline.Rentsarethereforepredictedtobemadecompetitiveinordertoluretenants.Similarly,thegrowingnewsupplyinHoChiMinhCityandHanoiwillsendofficerentsfurtherdownsincethenewprojects,mostlylocatedoutsidethecitycore,areanticipatedtobepitchedatratessignificantlylowerthanthoseintheCBD.

Offices: Driven by cost-savings and the continued flight to quality

In2013,thetopthreeofficeperformers indescendingorderarepredictedtobeJakarta,BeijingandBangkok.Similarto2012,Jakartawillcontinuetosteal the limelightwithananticipated35%rentgrowththankstothebuoyant leasing demand from overseas companies engaged in banking and finances. Beijing expects a rentalgrowthof10.9%,withmanydomesticfirmsandsomeMNCscontinuallyseekingofficespacesforrelocationandexpansion.Bangkokwilledgeupanother10%in2013primarilybecauseofthelackofnewsupplyintheCBD.However,theoverallgrowthpaceisgoingtobedilutedbytheforthcomingnewsupplyandthedeferredcompletionsofanumberofbuildingsto2013.

*NCRdenotesDelhi,NOIDAandGurgaon

Office Rents 2013 Forecast


Duetothestrongunderlyinggenuinedemand,theflowofliquidityandtheadditionalpushfromprice inflation, residential real estate prices inmostAsian cities showed differentdegreesofupsurgefromflatgrowthtomorethan26%in2012.Asapre-emptivemovetostopresidentialmarketsfromdevelopingintoassetbubbles,individualgovernmentshavebuiltupfirewalls intermsofbuyingandlendingrestrictionstocoolresidentialprices intheirhomemarkets.

Duetotheimplementationofadditionalbuyers’stampduty(ABSD)sincelateDecember2011,SingaporewasjustoneofthefewcitiesinAsiarecordingnegativepricegrowthin2012.Followingsuit,HongKongintroducedbuyers’stampduty(BSD)in4Q2012torestrictnon-localbuyingactivityintheresidentialmarket.AlthoughresidentialpricesinHongKongmanagedtorise3%in2012,themarketdirectionispredictedtoreversein2013.

Residential:Cities with pent-updemand will do well


Nevertheless,residentialmarketsinmostAsiancitiescontinuetolookgoodthankstothegenuinedemandfromthelocalresidentswhichhavebeengrowingduetonaturalbirthratesandmigrationofresidentsintourbancentres.Beijingwillcontinuetoseerobustcapitalgrowthduetolimitedsupplyinthemarketplace.Jakarta,ManilaandthekeycitiesinIndiaaretypicalcasesshowingsustainedgrowthintheresidentialmarketastheygraduallyrecoverfromtheglobalfinancialcrisis(GFC)whichhappenedinthesecondhalfof2008.Othermacro-reasonsaretheirmassiveinternalconsumptionbaseandthetrendofsustainedinflation.


Residential Capital Values 2013 Forecast

InJakarta,demandforstrata-titleunitshasbeengrowingsince2012.Potential upsiderisk remains in 2013 because of limitedsupply of stock particularly in the CBDandSouthJakarta.Demand for residentialproperties in India has been buoyant butsupplywastightin2012duetothedeferredcompletionsofnewprojects. If localbankssoften their stance on financing to localdevelopers, more new supply is expectedtocomealong,thusslowingtheprospectivepricegrowthto8%in2013.

As a first-tier city in China, Guangzhouwill continue to see its residential marketbeing regulated by the prevailing buyingrestrictions. However, sales prices arepredictedtoedgeupfurtherby5%duetothe strong demand from end-users and anumberofhigh-net-worthindividuals.

Colliers International 11


Closelylinkedtothetrendofpopulationgrowthandlimitedlandsupplyintheurbancore,retail rentals largelyshowedpositivegrowth in2012.Newretailsupply inthe formatofcommunityshoppingmallswillcomedownthepipelineindecentralisedlocationsoutsidethecitycore.Thankstofundamentalsupportbylocalresidents,Jakartawillseeanotherstrongyear in2013with rentspotentially goingupby20%during theperiod.Tomostresidents in Pakistan, shopping malls are essentially a new concept since there werevirtuallynoshoppingmallsinKarachifiveyearsago.Withtheon-goingstructuralchangeinthemarket,qualityshoppingmalldevelopmentsincentrallocationshavebeengraduallyacceptedbythecommunitywiththeaveragerentnearlythreetimesmoreexpensivethanstand-aloneretailfacilities.Rentsareexpectedtogatheradditionalgrowthmomentumtoriseover10%in2013.

Retail: Powered by growing urbanisation


Retailrentsinthefirst-tiercitiesofChinaremainpositivethankstothecontinuedincreaseinhouseholdincomeandtheencouragingdouble-digitgrowthofretailsales.Demandfromoverseaslabelsremainskeenonopeningtheirflagshipstoresinthefirst-tiercities.Withnewsupplyduetobecompletedlargelyinnon-traditionalareas,rentgrowthisgoingtogoflatorrisemoderatelyby1to3%in2013.Chengdu,oneofthemajorsecond-tiercitiesinChina,willdeliverexceptionalperformancethankstothedemandfromnewbrandsandtheexpansionaryrequirements from localretailers.Marketsentimentwillbe furtherbuoyedsincethenext“Fortune”GlobalForumisgoingtobeheldinChengduinmid-2013.However,withmorecompetitivestockdueforcompletionin2013,rentgrowthispredictedtotaperoffto5%in2013.InHongKong,rentswillgrowfurtherin2013.However,thepaceofgrowthisexpectedtotaperoffto9%sincethediscretionaryspendingbymainlandvisitorsmakingupmorethantwo-thirdsofthetotalinboundtouristsisforecasttoslowintandemwiththeperformanceofotherassetmarketsinChina.

InSingapore,rentsofprimeretailshopswillremainweakin2013furthertosomedownwardrental adjustment in 2012. The key challenges are the shrinkage of operatingmargins,growing competition and the shortage of labour amid the general slide of discretionaryspendingbylocalresidents.ProspectiverentfallinVietnamislargelyduetotheforthcomingnewsupplyintheoutskirtareaswhererentsaremorecompetitivethaninthecitycentre.

Retail Rents 2013 Forecast



Largelyabovemarketexpectations,theindustriallogisticsmarketshowedpositivegrowthontheleasingfrontin2012despitethechallengesintheexternalenvironmentincludingthesovereigndebtissuesintheeuro-zone.Itappearsthatthesectorisgoingtoperformagainanddeliverevenstrongergrowthin2013iftheeconomyinChinacanresumeitsgrowthmomentumaftertherecentperiodofstabilisation.Inourview,itislikelytohappenasthegovernmentinChinahasmademassiveinvestmentinanumberofinfrastructureprojectssince3Q2012andisdeterminedtorevivetheeconomybyboostingdomesticconsumption.Industriallogisticswarehousingisgoingtobenefitfromthetrendsinceprivateenterprisesincludingthoseengagedinthefast-movingconsumergoods(FMCG)sectorwillcontinuetooutsourcelogisticsfunctionstothird-partylogistics(3PL)operatorstosavecosts.

Industrial:Intra-regional demand spilled over from China

TheindustrialsectorofBeijinginparticularisgoingtobethestarperformerin2013.Capitalvaluesareexpectedtoincrease12.5%in2013duetothetightsupplyandsustaineddemand.Jakartacontinuestolookstrongin2013althoughprospectivebuyersarebecomingmoreresistanttothecurrentpricelevels.InBangkok,thevolumeofsalesactivityinthecityareahasbeenslowbutpricesareexpectedtobesupportedbyend-userswhohavegraduallyturnedtheirfocustothefringeareasofBangkok.InKualaLumpur,industrialrealestatelookspositiveduetothesupportbythegovernmentviagrantsandincentives.Capitalvaluesareexpectedtobesupportedbyforeigncompaniesfrom,forexample,SingaporelookingtorelocateandsetuptheiroperationsoutsideKualaLumpur.NCRinIndiaagainisanticipatedtoseefurthercapitalgrowthprimarilyduetotheupgradingdemandfrommanufacturersinlightindustriesandtheIT/ITessector.Meanwhile,theindustrialsectorinSingaporewasthestarperformerin2012,withrentsincreasingby10%andcapitalvaluessurgingby26%duringtheyear.However,therecentstrongrun-upinindustrialpropertypriceshaspromptedtheGovernmenttoimpose,witheffectfrom12January2013,aSeller’sStampDuty(SSD)onindustrialpropertiesthataresoldwithinthreeyearsofpurchase.Giventhesustainedlong-terminvestmentdemand,industrialcapitalvaluesareexpectedtostayflatin2013.

InChina,prospectivecapitalgrowthfor logisticswarehousesinGuangzhouwillbestrongerthantheotherpropertysectorsthankstothesupportfrompurchaserswhoareplanningtobuildmanufacturingormachineryassemblyfacilities.InShanghai,thelocallogisticswarehousing sectorwill seemore exciting growth thanks to increasing real estate requirements from overseas companieswho areengagedinthespecificindustries(e.g.high-techmanufacturing)preferredbythegovernment.

SeoulandTaipeiarepredictedtoundergoshort-termdownwardadjustmentsin2013.TheindustrialrealestatesectorinSeoul,primarilygearedtowardsmanufacturingindustries,ispredictedtoremainweaksinceinvestorsarescepticalofthedemandforimportsbythemajoreconomiesinthewest.ThemarketinTaipeiisgoingtobeaffectedbytheprevailinggovernment’sdeterminationtoopenthemarkettootherinvestorsinsteadofbeingtoodominatedbylocallifeinsurancecompanies.CitiesrelyingheavilyonexportstomatureeconomiesintheUSandtheeuro-zonewillseeamoresignificantdownwardadjustmentoncapitalvaluesin2013.


Industrial/Logistics Capital Values 2013 Forecast

Colliers International 19Asia Real Estate 2013 Forecast I Beijing, China

Beijing, China

Theworldeconomyisprojectedtopickupgraduallyin2013,withChinaremainingtheglobalgrowthleader,giventhecabinetreformatduringthe18thNationalCongress,theacceleratingdevelopmentofkeyinfrastructureprojectsoutlinedinthe12thFive-YearPlan,andthesteadydomesticeconomicgrowth.

DemandforBeijing’sofficepropertiesisexpectedtobestablein2013,withmanydomesticfirmsandsomeMNCscontinuallyseekingofficespacesforrelocationandexpansion.TheunbalancebetweentightsupplyandstabledemandintheGradeAsector should be somewhat cushioned by several new completions in 2013. Theoverallvacancyrateisprojectedtoedgeup,duetorelativelylimitedpre-commitment

1OfficereferstoGradeAoffices

2Residentialreferstoluxuryapartments

3Retailreferstomid-tohigh-endshoppingcenters

4Industrialreferstothelogisticssector

2012 2013

(% growth YoY) Rental Capital Values Rental Capital Values

Office1 19.4% 15.4% 10.9% 8.9%

Residential2 21.1% 26.1% 12.3% 16.7%

Retail3 6.5% 5.0% 4.6% 4.6%

Industrial4 10.7% 12% 9.4% 12.5%

GreaterChina

ratesofthenewsupply,butshouldremainatasingle-digitlevelof5.5%byend-2013.Assetperformanceisexpectedtoberelativelystable,too,withrentalandcapitalvaluesgrowingmoderately.Duetolimitedavailabilitiesandstrongdemandfromend-users,somesubmarketsshouldcontinuetoseeyieldcompressions.

The overall retail propertymarket remained positive in 2012,with rental and capitalvalues growingmoderately, in spite of cautiousspendingattituderisingonthebackofthevolatileworldeconomyandslowingdomesticeconomics.In2013,demandofretailersfromtheF&B,children’seducation,health&beautyaswellaspersonalcaresectorsshouldremainstrongwhilstthatofluxuryproductretailersshouldcontinuetoweakencomparatively.Fixedrentsandcapitalvaluesareforecasttogrowatasingle-digitpaceandyieldsareexpectedtoremainflatthroughout2013.

Inspiteofthecentralandlocalgovernments’tightenedpoliciesandlendingcontrolsonthehousingmarket,theoverallresidentialsalesmarket remained positive in 2012. The lettingmarketwas healthy too,with rental growth logged in at 21.1%YoY by end-2012. Thecontinuationoftheaforementionedpolicieswillbethehighlightin2013,continuallycurbingspeculativepurchasesandpreventingexcessivegrowth inpropertyprices.Demandforowner-occupancyandhousingconditionupgrades intheoverallresidentialpropertymarket isexpectedtoremainstable,underpinningthepriceup-ticks.

ThegrowthmomentumforBeijing’slogisticpropertymarketcontinuedin2012,fueledbythrivingbusinessexpansionsinthe3PLandE-Commercesectors.Thedisequilibriumofinsufficientsupplyandstrongdemandforleasingandinvestmentcontinuedtoleadtoafurtherupwarddriftonbothrentalandcapitalvalues.Theoutlookofthepropertysectorin2013shouldcontinuetobestrong,withinvestmentreturnsstabilisingoverthenext12-24months.

Asia Real Estate 2013 Forecast I Guangzhou, China

Guangzhou, China

Colliers International 21Asia Real Estate 2013 Forecast I Chengdu, China

Chengdu, China

Theofficerentalmarketsawamildcorrection in2012sincemostmulti-nationalcorporations were largely cost cautious on their real estate budgets. However,sizeable local enterprises and state-owned companies engaged in energy,infrastructureandmanufacturinglookingforexpansionareexpectedtotakeuptheslack in2013.Tenantswill betakingthenewsupplycomingon lineasamarketopportunitytoupgradefromoldertobrand-newGradeAofficedevelopmentswithqualitymanagement.

Theretailsectorcontinuestolookpositivein2013duetothedouble-digitgrowth(i.e.16%YoYinmid-2012)ofretailconsumptioninthecity,theincreasingnumber

ofnewbrandsandtheexpansionaryrequirementsfromlocalretailersaswell.However,thechallengetothemarketistheprospectivecompletionofabatchofnewsupplywithsimilarphysicalsettingsandtargetedspendinggroupsoverthenext12to24months.Anumberofretailerswillbeluredtobrandnewprojects,thusleavinglessconvenientdevelopmentssuchasthoselocatedoutsidethe3rdRingRoadwithslowerrentgrowthnextyear.Withtheadditionofnewstock,theoverallretailrentgrowthispredictedtoslowto5%in2013butretailcapitalvalueswillbegoingupsteadilyontheorderof3%peryear.

TheofficerentaltrendinGuangzhouisgoingtoreverse in2013duetotheprospectivesupplycomingonlineroughlyrepresentingadoublingofthehistoricalaveragecompletionrate,whiletherearenosignsofexpansiononthedemandfront.Prospectivebuyersareexpectedtobeconservativeinmakingtheirbidssincesalespriceshavesubstantiallyincreasedinthepastcoupleofyearsandthecurrentinvestmentyieldshavebeencompressedtoabout2-3%peryear.Assuch,itisourpredictionthatthepotentialupsideforcapitalvalueswillbelargelycappedat4%in2013.

In the residentialmarket, the prospective growth of capital valueswill be constrained by the prevailing buying restrictions.With theprospectivelaunchofafewsuper-luxurydevelopments,theaverageunitpriceswillbeslightlyhigher.Althoughthevolumeisthin,salespricescouldbesupportedbytheprevailingstrongdemandfromend-usersandanumberofhigh-net-worthindividuals.

Intheretailsector,newmallscomingonlineinGuangzhoucitywillbelimitedduetothelackofdevelopmentsites.Rentgrowthforexistingmallswilldependonthesuccessfulrestructuringoftenantmix.Developmentofnewmallsinthesuburbanlocationswillbetheon-goingtrendbutunitrentsareusuallyofferedatlowerrates.Salestransactionsaregenerallyconfinedtogroundfloorshops.Asusual,itisauniquesectordrivenprincipallybylocalplayers.

Intheindustrialsector,single-levelfacilitieswithhighheadroomateightmetersoraboveandsiteareaontheorderof3,000and10,000sqmwillremaininthemarketfavourin2013.Rentgrowthisgoingtobesteadyatabout3%in2013duetothesupportfrommanufacturingandmachineryassemblyactivity.Prospectivecapitalgrowthwillbethestrongestamongtheothersectorssincedemandwillbebuoyedbypurchaserswhoareplanningtobuildfortheirownuses.

1OfficereferstoGradeAoffice

2Residentialreferstoshoppingcenters

1OfficereferstoGradeAofficesintheCBD

2Residentialreferstotheunitsintheluxurysector

3Retailreferstoshoppingmalls

4Industrialreferstologisticswarehouseandsingleandmulti-storeyfacilitiesinindustrialparks

2012 2013


Office1 -2.0% 3.0% 6.0% 4.0%

Residential - - - -

Retail2 8.0% 3.0% 5.0% 3.0%

Industrial - - - -

2012 2013

(% growth YoY) Rents Capital Values Rents Capital Values

Office1 7.0% 12.0% -3.0% 4.0%

Residential2 10.0% 3.0% 8.0% 5.0%

Retail3 1.0% 3.0% 1.0% 1.0%

Industrial4 5.0% 8.0% 3.0% 6.0%

1OfficereferstoGradeAoffice

2Residentialreferstohigh-endunitslocatedintraditionalluxurylocations

3Retailreferstoground-floorshopsintraditionalshoppinglocations

4Industrialreferstofactoryandwarehouses


In2013, asking rentswill be raisedatbetterqualityofficebuildingscomingontothemarketin2013.However,theanticipatedrentgrowthwillbeslowerin2013inanticipationofslowerdemandgrowthandabatchofnewsupplycomprisingabouthalfamillionsquaremetresandthecompletionofafewbuildingsbeingdeferredto2013.Theofficesalesmarketisexpectedtoperformwellwiththestrongestgrowthamongtheotherrealestatesectorsin2013thankstothesustainedbuyinginterestsfromanumberoflocalinstitutionsandgrowinginterestamongdomesticplayers.

Giventheprojectionthattheprevailingbuyingandlendingrestrictionsonthelocalresidentialsectoraregoingtoremain intact,bothresidentialpricesandrentsare

Colliers Asia Real Estate Forecast 2013 I ShanghaiAsia Real Estate 2013 Forecast I Shanghai, China

Shanghai, China

1OfficereferstoprimeofficesintheCBD

2Residentialreferstohigh-endunitswithunitpricesatRMB40,000persqmorabove

3Retailreferstoshoppingmallsinbothcoreanddecentralisedlocations

2012 2013


Office1 10.0% 11.0% 6.5% 7.5%

Residential2 1.0% 3.0% 1.0% 3.0%

Retail3 1.1% 3.0% 1.1% 3.0%

Industrial 6.4% 7.0% 4.0% 5.0% Logistics

Industrial 2.8% 2.8% 2.5% 2.5% Workshop

expectedtoseeonlymildgrowthontheorderof1-3%atbestin2013.Assuch,realestatecapitalvaluesinothernon-commercialsectorsarepredictedtoenjoytheshiftofinvestmentcapitalandthebenefitsofaprojectedeconomicrecoveryin2013.

Theon-goingtrendofretailsalesinShanghairemainssolid.However,theretailrealestatesectorwillberelativelyflatin2013becauseofthesupplycycle,thusputtingacaponbothrentsandcapitalvalues.

Intheindustrialmarket,workshops,largelyfactoriesaregoingtostageamildgrowthin2013butthelocallogisticswarehousingsectorwillseemoreexcitinggrowthduetogrowingrealestaterequirementsfromoverseascompanies.However,thechallengeisalwaystheavailabilityoflandfordevelopmentalthoughspecificpreferredindustriessuchashigh-techmanufacturingcouldreceivespecialtreatmentfromthelocalgovernmentontheprocurementofindustrialsites.

Asia Real Estate 2013 Forecast I Hong Kong

Hong Kong

Despitethegeneralsofteningofrents,officeyieldswerecompressedfurtherin2012duetoinflationandcapitalflowfromthelocalresidentialsector.Officerentswillbuckthedownwardtrendin2013thankstosteadygrowingoccupationaldemandinthelegalsectorandthecontinuedsupportfrommainlandcompanies.Buyinginterestsincludingboth investorsandend-userswere immense forofficedevelopments indecentralisedlocations.InanticipationoffurtherrentstabilisationintraditionalCBDmarkets,salespricesincoreareasarepredictedtocatchupin2013.

The coolingmeasures implemented by the government on the residential sectoractuallyledtoanimmediatevolumecontractionin4Q2012.Upwardpricemomentum

stalledandhousingrents fell5%YoYascorporatetenantsdowngradedthemselvestomoreaffordablepremises.Lookingahead, thecurrenttrendofcapitalgrowthisgoingtobesustainedexceptintheresidentialsectorwhichispredictedtoconsolidateby10%asaresultoftheBuyers’StampDuty(BSD).

Intheretailsector,rentgrowthisgoingtotaperoffin2013sinceretailershavebecomemorerealistictomaketheiroffersmoreinlinewiththetrendofretailsales.Capitalvaluescouldseedouble-digitgrowth,againduetothestronginvestmentdemand.

Intheindustrialsector,prospectiverentgrowthisexpectedtostaysteadyin2013butcapitalgrowthispredictedtoslowtoabout10%afterthedistinctyieldcompressionin2012.However,qualitylogisticswarehousesareanticipatedtoseeoutperforminggrowthduetothelimitedsupplyinthemarketplace.

2012 2013


Office1 -3.0% 7.0% 5.0% 9.0%

Residential2 -5.0% 3.0% -5.0% -10.0%

Retail3 14.0% 27.0% 9.0% 11.0%

Industrial4 6.0% 20.0% 5.0% 10.0%

Colliers International 25Asia Real Estate 2013 Forecast I Taipei, Taiwan

Taipei, Taiwan

Officecapitalvalues increasedbyanestimated5.7%in2012notwithstandingthatrentsmovedgenerallysidewaysduringtheperiod.Thekeyreasonwasthatmostlocallifeinsurersdeterminedtoparktheircapitalinofficestockdespitethesustainedlowinvestmentyields.However,thecurrenttrendmightbereversedin2013.

Furthertothe increaseoftheminimumyieldsonreal-estate investments from1.875to2.125%inAugust2012,theFinancialSupervisoryCommission(FSC) increasedtherateto 2.875% in November 2012 in an attempt to curb short-term trading of commercialproperties.Shortlyaftertheannouncement,investmentsentimentforboththeofficeandindustrialsectorshasturnedcautious.Bothofficeand industrialpricesarepredictedtosoftenin2013sincemarketyieldsforofficesaregenerallyfetching2.5%.Moreimportantly,lifeinsurerswhousedtobethemainbuyersinthecommercialinvestmentmarketnowhavevirtuallydisappearedfromthemarket.

2012 2013


Office1 -0.5% 5.7% 1.0% -5.0%

Residential - - - -

Retail - - - -

Industrial2 2.1% 6.3% 1.0% -5.0%

1OfficereferstopremiumGradeandGradeAofficesinCBD

2Industrialreferstohi-specsbuildingsinNeihuTechnologyPark

NorthAsia

Colliers International 27Asia Real Estate 2013 Forecast I Tokyo, Japan Asia Real Estate 2013 Forecast I Seoul, South Korea

Seoul, South KoreaTokyo, Japan

Althoughthepaceofrentdeclinehasbeentaperingoffsince2008,themarketcontinuedtobechallengedbythecurrentsupplycycle–theyearwiththesecondlargestcompletionsince2003.However,duetothecompletionrateofnewdevelopmentsonaquarterlybasis,thecurrentsupplycyclesawitspeakin1Q2012.Rentscamedownandbottomedin3Q2012andstartedtorisein4Q2012afteranaccumulateddeclineofnearly40%sincetheglobalfinancialtsunamiin2008.In2013,officerentsareexpectedtoincreaseslightlyastherewillbelessnewsupplycomingontothemarket.Thevacancyrateisexpectedtoedgedownfrom8.5to7.8%in2013.Duetothestockavailability,itisourpredictionthattenantswillrelocatetohighergradeandbetterqualityofficedevelopments,thusleadingtoamildincreaseofrentandcapitalvaluesin2013.

TheindustrialmarketinTokyoispredictedtoremainstablein2013thankstothesteadyend-userdemandfromabatchoflocallogisticscompanies.Mostoftheleasingcontractsaresignedforatermof5to10years.Therefore,nodramaticchangesareexpectedintheoverallleasingmarket.Inthesalesmarket,moresalestransactionsareanticipatedsincetwoexistingJREITsandtwoothernewREITsarethereinthemarketplacetoexpandtheirportfoliosforlong-terminvestment.

Officerentsincreasedabout4%in2012thankstotheimprovementofoccupancyrates.Askingrentsfornewlycompleteddevelopmentswereraisedthankstotheupgradingdemandfromthefinancialservicessectorandanumberoflocalconglomerates(e.g.SamsungandDaelim).Asvendorsprovidelessincentive,effectiverentsandcapitalvaluesarepredictedtoincrease3to4%in2013.Onthesupplyfront,primeofficedevelopmentsaremadeavailable forsale-and-leasebackbyarangeofdomesticconglomerates forthepurposeofstrengtheningtheirbalancesheets.InvestmentfundsincludingNPS,KoreaTeachersMutualFundsandPoliceMutualFundsareexpectedtoremainthekeybuyersin2013.

Onthesupplyfront,urbanredevelopmentprojectsintheCBD-CheongjinDistrictNo.1,MyeongdongDistrictNo.3,DoryumDistrictNo.24andoneprimeofficebuilding,theFDIbuildingintheYBDwillcomeonstreamin2013,thusboostingthevacancyrateintheoverallofficemarketinSeoul.Domesticpensionandmutualfunds(e.g.NPS,KoreaTeachersMutualFunds)areexpectedtobethekeybuyersin2013.Inaddition,investmentactivitiesareexpectedtoremainupbeatsincemorequalitypropertieswillbeavailableforsale-and-leasebackbyarangeofdomesticconglomeratesforthepurposeofstrengtheningtheirbalancesheets.

Intheresidentialsector,rentgrowthisgoingtoberelativelysteadyontheorderof4%in2013.However,buyinginterestsareexpectedtoremainweaknotwithstandingthevariousstimuluspackagesimplementedbythegovernmenttomitigatenegativefactorssuchaseconomicuncertaintiesandthehighvolumeofnewsupplyandsoon.Mostend-userswouldthenresorttoleaseratherthantobuy.

Theindustrialsectorlooksgloomydespitetheprojectionofsteadily-risingrents.Mostprospectivebuyersaregenerallyscepticalabouttheprospectivegrowthduetotheweakprevailingdemandinthemanufacturingindustries.

2012 2013


Office1 3.9% 2.7% 4.0% 3.0%

Residential2 3.4% 0.2% 4.0% 1.0%

Retail - - - -

Industrial3 2.8% -6.5% 3.0% -5.0%

2012 2013


Office1 0.4% 1.2% 2.0% 0.3%

Residential - - - -

Retail - - - -

Industrial2 0.3% 0.2% 0.0% 0.0%

1OfficereferstoprimeofficesinSeoul

2ResidentialreferstoresidentialpropertiesinmajorareasinSeoul

3Industrialreferstosixmajorindustrialarea-Seongsu,Youngdeungpo,Namdong,Shihwa/Banwol,Pyeongtaek/Asan/Dangjin,BusanNoksan

1OfficereferstoGradeAdevelopmentsintheCBDareas

2Industrialreferstologisticswarehouses

Colliers International 29Asia Real Estate 2013 Forecast I Jakarta, Indonesia

Jakarta, Indonesia


2Residentialforleasereferstostockavailabletoexpatriates;Residentialforsalereferstostrata-titleunits

3Retailforleasereferstoshoppingmallswithatotalfloorareaof10,000sqmormore;Retailforsalereferstostrata-titleunits

4IndustrialreferstoindustrialestateslocatedingreaterJakartaincludingsub-marketslikeSerang,Tangerang,Bogor,BekasiandKarawang

Jakartasawverypositivegrowthofrealestatepricesacrosstheboardin2012.Theofficesectorstolethelimelightwith35and32%rentandcapitalgrowth,respectively.Thesametrendisexpectedtocontinuein2013thanksthebuoyantleasingdemandfromoverseascompaniesengagedinbankingandfinancialindustries.Withverylimitedstockforsale,officecapitalvaluescouldedgeupfurtherbutataslowerpacesincecapitalvalueshaveincreasedbymorethan60%overthepastcoupleofyears.Investmentyieldswouldsettleinarangebetween6and8%peryearin2013.

TheresidentialleasingmarketispopularamongmostexpatriatesbutitissmallinJakarta,representingonly7%ofthetotalstockinthemarket.However,rentgrowthisanticipatedtopickupadditionalmomentumtoabout6%in2013duetolimitedstockavailability.Inthesalesmarket,demandforstrata-titleunitshasbeengrowingsinceearly2012.Giventheongoingtrendandlimitedstockinthesub-marketsliketheCBDandSouthJakarta,pricescouldgoupby11%in2013.

Retailrentsforsizeableshoppingmallsincreased18%in2012.However,capitalvalueswereslowduetothefactthatmarketliquidityforstrata-titleretailunitshasbeenthinandprospectivegrowthhasbeensufferingfromalackofoverseasretailers.Assuch,prospectiveretailcapitalgrowthisgoingtobelimitedatlowsingledigitsin2013.

IndustrialrentsinJakartaincreasedsignificantlyby18%in2012althoughthatrepresentsasmallportionofthetotalindustrialtransactions.Thesalesmarketshowedremarkablegrowthwithpricesrisingby25%duringtheyear.Sinceindustrialistsshowincreasingresistancetothecurrentpricelevel,askingpricesareanticipatedtobereduced.Itisourpredictionthattheoverallindustrialcapitalvalueswillslowto11%in2013.

2012 2013


Office1 34.5% 31.6% 35.0% 20.7%

Residential2 3.2% 11.8% 5.5% 10.6%

Retail3 17.8% 2.1% 20.0% 3.2%

Industrial4 18.0% 24.5% 5.0% 10.5%

SoutheastAsia

Colliers International 31Asia Real Estate 2013 Forecast I Kuala Lumpur, Malaysia

Kuala Lumpur, Malaysia

1OfficereferstoGradeAofficebuildingsinKualaLumpur

2Residentialreferstoluxurycondominiumsandservicedresidences

3RetailrefersprincipallytoshoppingareasinKualaLumpur

4IndustrialrefersprincipallytotherentsofwarehousesandcapitalvaluesofthelandpricesinGreaterKualaLumpur.

WithastableeconomicoutlookexpectedinMalaysia,supportedbycontinuedstrongdomesticconsumptionandinvestment,KualaLumpurforeseesacautiousgrowthintheresidentialsectorwhileallotherrealestatesectorsmaymoderate. Intheofficesector,rentsandcapitalvaluesremainstableassupplycontinuestobeprojected into themarket (2.5millionsq ftofofficespace in2012andabout4-5millionsqftofofficespacein2013).Thesefutureofficedevelopmentsare,inmostcases,notpre-leasedandlandlordsarelookingfortenantstofillupthesespaces.Intheleasingsector,structuralchangesareseenbymajortenantstakingtheopportunitytorelocateand/orexpandtobetterqualitybuildingswithinthecity

centre.Maintenantsarefromtheoil&gasandfinancesectors. Theresidentialmarketsentiment inKualaLumpurhasbeenupbeatsince lastyearasresidentialpropertypricesandnewsupplyhasfurtherincreased.However,risingsupplyandweakdemandareexpectedtoputfurtherpressureonthecondominiumrentalmarket.Incontrast,thelandedresidentialsegmentcontinuestoshowstrongtake-uplevelsandremainsattractivetolocalinvestors. KualaLumpurfunctionsastheretailandfashionhubforMalaysiaandastourismplaysanimportantroleinKualaLumpur’sservice-driveneconomy,theretailmarketinKualaLumpurisperformingrelativelywell.Lookingforward,thefuturesupplyofretailcentresintheKlangValleyisexpectedtoincreaseby7.63millionsqftbetween2012and2014whichrepresentsanaverageannualincreaseof5-6%intotalnetlettablearea(NLA)ofshoppingmallsintheKlangValley.Retailrentsareexpectedtoremainstablewhilehealthygrowthof5%ormoreincapitalvalueisexpectedin2013. Mostoftheindustrialdevelopmentsareledbythepublicsector.Tohelpnewentrepreneursgetstarted,thegovernmentprovidesvarioustypesoffundingintheformofgrants,loansandincentivesforvariousindustrialsectors.Themostactiveindustrialsectorsarefromthelogisticsandsmallandmediumenterprises(SME)sectors.Withastableeconomicoutlook,theindustrialpropertymarketcouldpotentiallybenefitfromforeignfirms,especiallyfromSingapore,relocatingorsettinguptheiroperationsinwell-establishedindustrialparksthathavegoodinfrastructure,facilitiesandconnectivity.

2012 2013


Office1 0.0% 0.0% 0.0% 0.0%

Residential2 0.0% 0.0% 0.0% 0.0%

Retail3 5.0% 5.0% 0.0% 5.0%

Industrial4 7.5% 6.0% 5.0% 5.0%

Asia Real Estate 2013 Forecast I Karachi, Pakistan

Karachi, Pakistan

TheKarachiofficemarketcontinuestofacechallengingproblems,includingterrorismthathasnegativelyinfluencedthebuyinginterestoflocalandforeigninvestorsintheofficemarket.Withanexistingoversupplysituationinthemarketandnoactualnewdemandgeneratedfromlocalandforeigncompanies,rentsforgoodqualityofficebuildingsinKarachiareforecasttoriseslightlyatanaverageof2%in2013whereas,thecapitalvalueswill remain flat.Themajorityofthetenantstakingupspace inthesebuildingsareengagedin“FastMovingConsumerGoods”(FMCGs),theoilandgassectorandthetelecomindustry.

Supported by strong population growth and an intercitymigration trend, healthy

growth in the residential sector is expected in 2013. Nonetheless, due to the difficult economic conditions, the considerable drop inpurchasingpoweramonggenuinehomebuyers,therehasbeenashiftofdemandfromluxuryunitstothemoreaffordablehousingsector.Rentsarepredictedtorise5%whilecapitalvalueswilledgeup4%intheresidentialsectorofKarachiin2013.

RetailshoppingmalldevelopmentsinKarachiareperformingrelativelywellduetosolidconsumerspendingandashiftofthepopulation’spreferencetowardsone-stopshopping(i.e.malldevelopment).Goodqualitymallscateringtohigh-endforeignandlocalbrandshavebeenachievinganoccupancyrateofabove75%onaverage-aclearsignshowinghealthydemandfromforeignretailersinKarachi.Overallretailrentsarepredictedtoincrease10%andcapitalvalueswillgrow7%onaveragein2013.

1OfficereferstoprimeofficebuildingsinKarachi

2Residentialreferstothemassmarketandhigh-endresidentialunitsinKarachi

3RetailreferstomalldevelopmentsinKarachi

2012 2013


Office1 -0.5% 0.0% 2.0% 0.0%

Residential2 5.0 2.0% 5.0% 4.0%

Retail3 10.0% 0.0% 10.0% 7.0%

Industrial - - - -

Colliers International 33Asia Real Estate 2013 Forecast I Manila, Philippines

Manila, Philippines 2012 2013


Office1 9.8% 9.5% 6.5% 4.2%

Residential2 11.0% 8.3% 9.5% 6.2%

Retail3 4.0% Flat 4.4% Flat

Industrial4 3.3% Flat 3.2% Flat

Withstrongdemandfromthebusinessprocessoutsourcing(“BPO”)sectorforprimeofficesintheCBDarea,officerentswillseeanincreaseby9.8%attheendofthisyear.In2013theofficerentsareexpectedtoslowto6.5%sinceabatchofnewsupplycomprisingoveronemillionsqmoffloorareawillbecomingtoMetroManilain2013and2014.DuetolimitedsupplyinMakatiCBD,therewillbeacontinuedshiftofleasingdemandtothefringeareassuchasBonifacioGlobalCity(“BGC”)wheremorestockisavailableatcheaperrents.Meanwhile,thesalesmarketisexpectedtobenefitfromthesustainedbuyinginterestsfrombothlocalandoverseascompanies.

Theresidentialmarketwillcontinuetolookstrongin2013duetotheanticipatedeconomicgrowthin2013andthesustainedoccupationaldemandfromexpatriates.However,prospectivegrowthofrentsandpricesareexpectedtoslowto9.5and6.2%,respectively,sincetherewillbe2,800newunitscomingontothemarket,representing12%growthYoY.

RetailsalesremainrobustduetothestrongconsumerspendingandtheincreasingpopulationinthePhilippines.BesidestheCBDs,moreshoppingmallsandsuperstoresarealsoexpectedinthesecondandthird-tiercities.Moreover,thestrip-mallconceptislikewiseagrowingtrend.Retailrentswillgenerallytrackwiththeeconomywithrentsgrowingbetween4and5%nextyear.

Industrialrentsareexpectedtostayrelativelyflatnextyear.Growthintheindustrialsegmentremainsrestrictedduetothehighelectricitycostsandweakglobaldemand.Moreover,electronicproducts,amajorsourceofPhilippineindustrialexports,haveperformedpassivelyoverthe last fewyears.Thus,theoutlookon industrialrents in2013 isthattheywill remainrelativelyneutral.However,an increaseinJapanesecompaniesscoutingfor industrialpropertieshasbeenobserved,whichmight indicatearelocationtrendbytheseforeigncompaniestothePhilippines.


2Residentialreferstothree-bedroomunitslocatedintheCBD

3RetailreferstoshoppingmallsandsuperstoreslocatedintheCBD

4Industrialreferstologisticswarehouses

Singapore

Asia Real Estate 2013 Forecast I Singapore

Weighed down by the sluggish global economy, Singapore’s economic growth isexpectedtoslowto1-3%in2013.Demandforofficespacefromthesentimentdrivenfinancialservicesindustryishenceexpectedtoremainundertheweightofeconomicuncertainties.Nonetheless,amorediverseoccupierdemand–thatextendsbeyondthefinancialservicessectorincludingbroad-basedservicesfirmssuchasthose in theprofessional and legal services industries, insuranceandcommoditysegments–isexpectedtoprovidesupporttothesector,thusmoderatingtherentdeclineto5%in2013.Overallcapitalvaluesofofficespacecouldholdstablewithonlymarginaldownsidesin2013onthebackofhealthyfundamentalsinthestrata-titledofficemarketgiventhe low interest rateenvironmentandcontinued limited

1Officereferstowhole-blockGradeAdevelopmentsforleaseandstrata-titledunitsforsales

2Residentialreferstoluxurynon-landedprivateresidentialproperties

3Retailreferstoground-floorretailspaceforleaseandstrata-titledunitsforsales

4AllindustrialrentalandpriceindicesrecordedbytheUrbanRedevelopmentAuthority

2012 2013


Office1 -7.0% -1.0% -5.0% 5.0%

Residential2 -4.0% -5.0% -10.0% -5.0%

Retail3 -3.0% 6.0% -5.0% 3.0%

Industrial4 10.0% 26.0% 5.0% Flat

supplyofprimestrata-titledofficespace.Recentanti-speculationmeasuresimposedintheresidentialandindustrialsectorswillcontinuetodivertsomeinvestmentcapitaltotheofficemarket.

Therecordlevelofhousingtransactionsandreaccelerationofpropertypricesfuelledbythepro-buyingenvironmentoflowinterestratesandexcessliquidityledtheGovernmenttointroducemorecoolingmeasuresinJanuary2013.Thisseventhroundofcoolingmeasuresiscalibratedtodampeninvestmentdemand,reininsoaringpricesanddiscouragebuyersfromoverextendingthemselves.Amongotherthings,theAdditionalBuyer’sStampDuty(ABSD)ratesforthepurchaseofresidentialpropertieswereraisedbetweenfiveandsevenpercentagepoints.Loan-to-Valuelimitsonhousingloansgrantedbyfinancialinstitutionswerealsoloweredforindividualswithatleastoneoutstandinghousingloan,aswellasfornon-individualborrowerssuchascompanies.Inaddition,theminimumcashdownpaymentforindividualsapplyingforasecondorsubsequenthomemortgageswasraisedfrom10to25%.Thepoolofpotentialbuyerswillshrinkassomewillbepricedoutduetothecurbs,whileotherswillstayonthesidetoassessthe impactonthemarketandtheirplannedinvestments.Foreignbuyers,whoformthemainbaseforthepurchasesofluxuryresidentialpropertiesinSingapore,willbeaffectedbytheincreasedABSDto15%.However,Singaporeremainsattractiveasitisstable,safefromnaturaldisasters,providesgoodprotectionofpropertyrights,andhaslittlecurrencyrisk.Hence,whilesomeforeignerscouldbedeterred,therewillstillbethosewhoviewthelatestmeasuresasanotherone-timetaxonpropertythattheyarewillingtopay.Overall,foreignparticipationisexpectedtoslidefromcurrentlevelsbutpricesofluxurynon-landedresidentialpropertiesareexpectedtoremainrelativelystablewithamarginallyslipof5%in2013.

In2013,consumersentimentcouldbeliftedbythelatestroundofQuantitativeEasing(QE3)bytheUnitedStatesFederalReserve.RetailsaleswillalsobeaugmentedbyhealthytouristarrivalsonthebackofnewandreinventedvisitorattractionsinSingapore.Yetdiscretionaryspendingbylocalresidentsmayslidegiventheweakeconomicoutlook.Also,despitetheretailsector’sexpectedresilience,retailersandF&Boperatorshaveto facethegrowingchallengesbroughtaboutby increasedcompetitionandoperationalchallengessuchasstaffshortages.Allofthesewillhaveabearingonthedemandforretailspace.Assuch,rentsofprimegroundfloorretailspaceintheOrchardRoaddistrictareforecasttoseesomedownwardpressuretothetuneofupto5%ascompetitionoftenantsbetweenmallsstiffensin2013.Thesalesmarketwilltelladifferentstory.Thesalesmomentumofstrata-titledretailspaceisexpectedtocontinuein2013.Capitalvaluesareprojectedtocontinuetotrendupwardsasinterestforexistingandnewstrata-titledretailspacefrominvestorsandend-usersareexpectedtoremainhealthy.


Theindustrialsectoristrulythestarperformerin2012,withrentsincreasingby10%andcapitalvaluessurgingby26%duringtheyear.Theunabatedgrowthinindustrialpropertypriceshasbeensupportedbyhealthybuyingactivityfromend-usersandinvestors.Therecentstrongrun-upinindustrialpropertypriceshaspromptedtheGovernmenttoimpose,witheffectfrom12January2013,aSeller’sStampDuty(SSD)onindustrialpropertiesthataresoldwithinthreeyearsofpurchase.Themeasureaimstodiscourageshort-termspeculativeactivityandrein in industrialpropertyprices.Unlikespeculators, it isexpectedthatend-usersandinvestorswitha longer investmenthorizonareunlikelytobeadverselyaffectedbytheSSDandwillcontinuetoprovidesomesupporttothestratasalesmarketwhichisalsoexpectedtocontinuetobenefitfromthelowinterestrateandhighliquidityenvironment.Nonetheless,buyersarestillexpectedtobecautiousandpricesensitiveduetoacombinationoffactorsincludingthelatestGovernmentmeasure,thepersistentglobaleconomicheadwindsandhighercompetitionfortenantsarisingfromrecentmovestoevictunauthorisedindustrialspaceusersandfromthespateofnewstrata-titledindustrialprojectssoldoverthepastfewyears.Inthelightoftheabove,theindustrialpropertymarketisexpectedtobemorestablein2013,withindustrialcapitalvaluesexpectedtoremainrelativelystablewithminimalfluctuationsin2013.Industrialrentsarealsoprojectedtoriseataslowerpace.

Asia Real Estate 2013 Forecast I Bangkok, Thailand

Bangkok, Thailand

1OfficereferstoGradeAofficebuildingslocatedintheCBD

2Residentialreferstothehigh-endsectorinthecity

3Retailrefersprincipallytoshoppingcentresinthecity

4Industrialreferstologisticwarehouses

SincetherewillbenoofficedevelopmentsscheduledforcompletionintheBangkokCBDduring2012and2013, thecurrentupward trend forboth rentsandcapitalvaluesisexpectedtobesustainedin2013.Officeinvestmentyieldswillbelargelysteadyintherangeoffrom5to7%in2013inanticipationofthecontinuedsupportofanumberoflocalend-usersandinvestors.

In the residential sector, prospective rent and capital growth will be slowed bytheplentifulsupplyofcompletedschemesnotwithstandingthatanumberofnewresidentialdevelopmentscurrentlyunderconstructionwillbedeferredbyagenerallack of construction workers. Real estate buyers comprising mainly locals will

continuetosupportthemarket,particularlytheprojectsalongthemasstransitlineinthecityarea.

Withageneralincreaseindomestichouseholdincomeandtheongoinggrowthofretailsales,retailrealestateinBangkokcontinuestolookpositivein2013.AnothergrowingtrendisthegradualcompletionofresidentialprojectsinthesuburbanlocationsofBangkok,thusunderpinningthedemandforshoppingandretailfacilitiesinthoseareas.

Industrialrealestaterentsandcapitalvalueswillbeedgingupsteadilyin2013butthesectorwillberelativelyquietintermsoftheleveloftransactionalactivityparticularlyinthecityareawhereexistingindustrialpremiseshavebeencompletedformorethan15years.Overseascompanies(e.g.JapaneseandEuropean)wouldrathergotothefringeareasofBangkoktosearchforindustrialsiteswithlandedareaontheorderof10,000sqmormore.

2012 2013


Office1 10.0% 8.5% 10.0% 8.0%

Residential2 10.0% 10.0% 5.0% 5.0%

Retail3 5.0% 5.0% 5.0% 5.0%

Industrial4 10.0% 7.0% 10.0% 7.0%

Asia Real Estate 2013 Forecast I Singapore

Colliers International 37Asia Real Estate 2013 Forecast I Ho Chi Minh City, Vietnam

Ho Chi Minh City, Vietnam

1OfficereferstoofficedevelopmentslocatedinDistrict1,2,3,4,5,7,10,11,TanBinh

2ResidentialreferstoresidentialdevelopmentslocatedinDistrict1,2,3,4,5,6,7,8,10,11,TanBinh,BinhThanh,BinhTan

3RetailreferstoretaildevelopmentslocatedinDistrict1,2,3,4,5,7,10,11,TanBinh

In theofficesector, rentsarepredicted toedgedownby6% in2013 inadditiontothe7%declinein2012.OfficesupplyinthecentralareasremainslimitedsincetheCBDinthecityissmall.Newprojectscomingonlineareprimarily locatedinthe fringe districts. However, completion of individual projects have either beendeferredorsuspendedsincedeveloperscontinuetofacethechallengeoffinancingtheircashflows.Althoughthegovernmenthasrelaxedinterestratecontrols,banksremainhesitanttolendtodevelopersotherthanthelargeandwell-establishedlocaldevelopers.AsianinvestorsfromJapan,KoreaandThailandinparticularhavebeenlookingatthisasdistressedopportunities.

Intheresidentialsector,therewillbeanincreaseinnewsupplyin2013,thusputtingsomedownwardpressureonrents.However,capitalvaluesremainontherisenotwithstandingtheprojectionthatthegrowthpacewillbetaperingoffto2%in2013.

Intheretailsector,newdevelopmentcomingonlineislimitedafterthelaunchofVincomCentreA,theprimeshoppingcentrelocatedinthecitycentre,andtwootherprojectsoutsidetheCBD.Rentaloffersinthebrandnewretaildevelopmentsintheoutskirtsatelliteareasarecompetitiveasvendorsaredeterminedtofilltheirdevelopments.Itisourviewthatretailrentsandcapitalvalueswilledgefurtherdownin2013beforeareboundby2014attheearliest.

2012 2013


Office1 -7.0% 0.0% -6.0% 1.0%

Residential2 -8.0% 7.0% -6.0% 2.0%

Retail3 -12.0% 3.0% -8.0% -4.0%

Industrial - - - -

Asia Real Estate 2013 Forecast I Hanoi, Vietnam

Hanoi, Vietnam

1OfficereferstoofficedevelopmentsinCBD(HoanKiem,HaiBaTrung,BaDinh)andsatelliteareasintheWest(CauGiay)

2ResidentialreferstoresidentialdevelopmentsinCBD(HoanKiem,HaiBaTrung,BaDinh)andsatelliteareasintheWest(CauGiay)

3RetailreferstoretaildevelopmentsinCBD(HoanKiem,HaiBaTrung,BaDinh)andsatelliteareasintheWest(CauGiay)

Intheofficesector,rentsremainfirmontheorderofUSD50persqmpermonth.However,theoverallrentlevelwillcontinuetobesuppressedbytheintroductionofmorenewdevelopmentsintheoutskirtareassuchasCauGiaydistrictinthewestwhererentsaresignificantlylowerthanthoseintheCBD.DevelopmentsrecentlycompletedincludeKeangnamHanoiLandmarkTowerandIndochinaPlazaHanoi.Officerentalsarepredictedtocomedownby17%in2013.Onthesalesfront,capitalvaluesaregoingtoedgedownby9%sinceinvestorsaregenerallychallengedbythedifficultyofgettingaccesstobankfinancing.

Intheresidentialsector,rentsareanticipatedtoremaininadownwardtrendin2013.Again,capitalvalueswillbedampenedbythelarge,new,luxurysupplycomingonlinein2013.

Intheretailsector,rentalperformancewillremainnegativein2013sincetherewillbeanincreaseofnewsupplyinthefringeareas.ThemostsuccessfuldevelopmentsarelocatedintheCBDwithTrangTienPlazashoppingmall-arenovateddevelopmentwhichisscheduledtocomeontothemarketin2013.

2012 2013


Office1 -6.0% 0.0% 17.0% -9.0%

Residential2 -9.0% 6.0% -9.0% -1.0%

Retail3 -10.0% 4.0% -10.0% -2.0%

Industrial - - - -


India&CentralAsia

Asia Real Estate 2013 Forecast I Bengaluru, India

Bengaluru, India


2Residentialreferstothehigh-endsector

Duetothesignificantcontraction intheoverallabsorptionrateandthecontinuedrelocationoftenantsfromtheCBDtodecentralisedareas,officerentsinBengalurudeclined3%in2012.Onthedemandfront, it isgoingtobedrivenbytheIT/ITessector.Newsupplywillbeessentiallyoffered for lease. Inanticipationofamorebalancedsituationbetweendemandandsupply inthecomingmonths,bothofficerentsandcapitalvaluesareexpectedtostaylargelyflatin2013.Prospectivebuyerswillbegenerallycautiousinmakingtheiroffers.

The high-end residential sector in Bengaluru has been performing well with anencouraging15%capitalgrowthin2012thankstothegrowingsizeofthepopulation

2012 2013


Office1 -3.0% 5.0% Flat Flat

Residential2 4.0% 15.0% Flat 8.0%

Retail - - - -

Industrial - - - -

andthemigrationofresidentsintotheurbancore.Thecurrenttightsupplysituationwillremainthereduetothedeferredcompletionsofanumberofnewprojects.Assuch,residentialpriceswillseefurthergrowthof8%in2013.Goingforward,thesupplylevelwillgraduallyincreasesincelocalbankshavesoftenedtheirstanceinofferingfinancingtodevelopers.

Colliers International 41Asia Real Estate 2013 Forecast I Chennai, India

Chennai, India



OfficeleasingdemandinChennaishowedsignsofslowingdowninthesecondhalfof2012althoughtheoverallofficerentmanagedtoedgeupby1%throughouttheyear.Inviewoftheoverallslowdownineconomicgrowthandthesustainedtrendofcost-savingsinitiativesadoptedbymostoccupiers,officerentgrowthwillbecapped.Theexistingvacancyontheorderof20%andtheforthcomingnewsupplyestimatedtobeabout4millionsqftperyearareexpectedtosendofficerentsdownby2%in2013.

Given the fact that Chennai is the capital city of the Indian state, demand in theresidentialsectorremainedstrong.Althoughthegrowthpaceisexpectedtotaperoffto8%in2013,thesalesmarketofsmall-to-mediumsizeunitswillcontinuetobeunderpinnedbygenuineend-usersamongmiddle-incomehouseholds.

2012 2013


Office1 1.0% 0.0% -2.0% -2.0%

Residential2 15.0% 21.0% Flat 8.0%

Retail - - - -

Industrial - - - -

Asia Real Estate 2013 Forecast I NCR, India

NCR, India

NCR=Delhi,NoidaandGuragon



3Industrialreferstowarehouses,factoriesandofficesoflightindustries

AttributedtotheincreasingsupplyofofficedevelopmentsoutsidetheCBD,theaverageoffice rent in NCR fell 1% in 2012. With the on-going trend of tenants moving todecentralisedareas,vacancyinprimeofficesintheCBDwillincreasewhilerentswillfallfurtherby3%in2013.

Demand fundamentals in the residential sector remain healthy. However, with agenerallackofsupply,bothresidentialrentsandcapitalvaluesincreased21and24%,respectivelyin2012.Thegrowthmomentumisgoingtoslowin2013.

In the industrial sector, themarket outlook continues to look positive thanks to thedemandfromlightindustry(IT/ITes).TheGovernmentofIndiahasbeensupportiveinupgradingthelocalinfrastructuretotheinternationalstandards.Theongoingtrendisthatindustrialfacilitieshavebeendevelopedbyend-usersforself-occupationpurposes.

2012 2013


Office1 -1.0% 0.0% -3.0% Flat

Residential2 21.0% 24.0% 5.0% 12.0%

Retail - - - -

Industrial3 3.0% 5.0% 5.0% 5.0%

Colliers International 43Asia Real Estate 2013 Forecast I Mumbai, India

Mumbai, India



In the office sector, leasing demand slowed considerably in 2012 with overallcontractionofrentsby4%.Inanattempttosavecosts,tenantshavebeenrelocatingoutoftheCBD,thusleavingmorevacantspaceinthecoreareas.Goingforward,bothrentsandcapitalvaluesarepredictedtofall3%in2013.

Intheresidentialsector,pricesarecurrentlyperceivedtobeatapeakasprospectivebuyersturncautious. Inadditiontothe9%capitalgrowth in2012, themarket isanticipatedtogosidewaysduetotheincreasinglevelofnewsupplyin2013.

2012 2013


Office1 -4.0% 0.0% -3.0% -3.0%

Residential2 1.0% 9.0% 0.0% 5.0%

Retail - - - -

Industrial - - - -

Asia Real Estate 2013 Forecast I Kazakhstan

Kazakhstan

1OfficereferstoClassA&BofficebuildingswithintheCBD

2Residentialreferstoallunitsinbusinessandpremiumclass

3Retailreferstoshoppingcentres

4Industrialreferstopremisesinindustrialzones

2012 2013


Office1 0.0% 0.0% 0.0% 0.0%

Residential2 0.0% 5.0% 0.0% 5.0%

Retail3 10.0% 0.0% 10.0% 0.0%

Industrial4 0.0% 0.0% 0.0% 0.0%

Officerentsarelikelytocontinuestayingflatin2013thankswithgrowingdemandfromanumberoflocalcompaniesinfinanceandmining&resourcessectoraswellasfrominternationalcompaniesrepresentedinKazakhstan.Inthesalesmarket,therehasbeenbuyinginterestinofficepremiseswithsizesrangingfrom500to1,000sqm.Theseweremainlydetachedbuildingsnotdesignedspecificallyforofficeusebutlocatedwithintheprimeareasofthecity.TheaskingpricepersquaremetrewasintherangeofUSD1,600-3,000persqm. Theresidentialmarketremainedstablewhichwassupportedbypositivesocial-economicdevelopmenttrendsinKazakhstan.InJune2012,thegovernmentdevelopedanewstatemulti-purposeresidentialprogramme,“AffordableHousing2020”.Themaingoaloftheprogrammeistoprovideresidentswithaffordablehousing.Thisprogrammeaimstodevelop1millionsqmofrentalhousingby2014andincreaseconstructionvolumeupto10millionsqmby2012.Thesalespricesintheprimaryandsecondarymarketsareexpectedtoseeamoderategrowthof5%asmostprojectsin2008weresuspendedorputonhold.

Theretailmarket inKazakhstanhasbeenstayingonanupwardtrendformanyyears. Investorshavebeenencouragedbythesteadyongoingrentgrowthofabout10%peryear.Assumingthesuccessfulcompletionofallplanned,newretaildevelopments,supplywilllikelyincreaseby120%bysecondhalfof2016.

IndustrialrentsinKazakhstanremainedflatin2012withsupplyofqualitypremisesbeinglimited.Thegovernmenthasstartedattendingtotheseproblemsbyputtingmoreresourcesintoinfrastructureandcompaniesoutsourcingtheirlogisticsfunctionswillreceivesupportfromthegovernment.However,theindustrialmarketwillremainflatin2013untilafurtherimprovementofinfrastructureconnectivityinthecity.

Executive SponsorPiersBrunnerChiefExecutiveOfficer,[email protected]:+85228220727

AuthorSimonLoExecutiveDirectorResearch&Advisory,[email protected]:+85228220511

JessyChung AnalystResearch&Advisory,[email protected]:+85228220643

Forfurtherdetails,pleasecontact:

www.colliers.comThisdocumenthasbeenpreparedbyColliersInternationalforadvertisingandgeneralinformationonly.ColliersInternationalmakesnoguarantees,representations orwarrantiesofanykind,expressedorimplied,regardingtheinformationincluding,butnotlimitedto,warrantiesofcontent,accuracyandreliability.Anyinterested partyshouldundertaketheirowninquiriesastotheaccuracyoftheinformation.ColliersInternationalexcludesunequivocallyallinferredorimpliedterms,conditionsandwarrantiesarisingoutofthisdocumentandexcludesallliabilityforlossanddamagesarisingtherefrom.ThispublicationisthecopyrightedpropertyofColliersInternationaland/oritslicensor(s).©2013.Allrightsreserved.

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