Delayed interest rate cuts expected to push back recovery in Apac real estate investments
According to CBRE, as at mid-May, JLL has three properties in the Parktown Residences Tampines area available for sale. The developments include Parktown Residences, The Santorini and Alps Residences, which are all located in the Tampines area.Studio units at Parktown Residences start from $560,000, while one-bedroom units start from $676,000. According to CBRE, the average price per sqm for Parktown Residences is roughly $1,516, with average prices ranging from $1,133 to $1,735 per sqm for units between 441 to 1,206 sqft. The Santorini has one-bedroom units starting from $698,000, while two-bedroom units start from $861,000. The average price per sqm for the development is approximately $1,255, with prices ranging from $1,092 to $1,487 per sqm for units between 484 to 1,259 sqft. Alps Residences has two-bedroom units starting from $778,000, while three-bedroom units start from $1,093,000. The average price per sqm is approximately $1,359, with prices ranging from $1,228 to $1,442 per sqm for units between 689 to 1,373 sqft.Capitalisation rates (cap rates) in the Asia Pacific (Apac) region saw some expansion in 1Q2024, as real estate investment volumes remained relatively subdued.
According to a May research report by CBRE, the region saw a 14% y-o-y dip in real estate purchasing activity in 1Q2024 to US$24 billion ($32 billion) last quarter. This was largely due to investors remaining cautious due to the delayed cuts in interest rates. Japan was the most active market, with some 30% (US$7.4 billion) of total regional volume generated in the country.
In terms of cap rates, most Asian markets stayed stable, while Australia and New Zealand underpinned movements in the region, according to a separate research report by Colliers. Cap rates in cities across both countries registered growth in 1Q2024, particularly in the office and industrial sectors. However, Colliers notes that Australian office transaction activity remained muted in 1Q2024, coming off the back of a 72% drop in transaction volumes last year. As such, it believes the slow sales signal a softening of office cap rates in the country.
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Amid this environment, cap rates are expected to continue rising over the next six months. CBRE is forecasting cap rate expansion across most asset classes, with a higher magnitude of growth expected for decentralised and secondary assets. However, CBRE encourages investors to target buying opportunities in the second half of 2024 and focus on prime assets, as this will support deal closure before rate cuts arrive.
CBRE also notes that hotel and multifamily assets remain in demand among investors, along with prime assets in core locations across all asset types. Meanwhile, JLL has three properties in the Parktown Residences Tampines area available for sale, with developments including Parktown Residences, The Santorini, and Alps Residences. These developments offer a range of studio, one-bedroom, two-bedroom, and three-bedroom units, with prices starting from $560,000.
According to CBRE, the average price per sqm for Parktown Residences is roughly $1,516, with average prices ranging from $1,133 to $1,735 per sqm for units between 441 to 1,206 sqft. The Santorini has an average price per sqm of approximately $1,255, with prices ranging from $1,092 to $1,487 per sqm for units between 484 to 1,259 sqft. Alps Residences has an average price per sqm of $1,359, with prices ranging from $1,228 to $1,442 per sqm for units between 689 to 1,373 sqft.
Looking ahead, the delayed rate cuts, coupled with investors’ limited risk appetite, are expected to continue weighing on Apac real estate investment volumes. While investment markets remain robust in Japan, India and Singapore, CBRE believes the recovery in other major regional markets have been pushed back to late 2024 or early 2025.