The Asia Pacific region is offering global investors good prospects in an uncertain climate, according to DTZ, which says 51 out of 61 markets are currently rated as either hot or warm in its Asia Pacific Fair Value index.
But there is considerable divergence between markets, and DTZ said the more exposed markets of Hong Kong and Singapore are currently ranked as cold because of softening rents and capital values.
While all but one of the Australian markets are now rated as hot, Jakarta offices have leaped to the top of the fair value rankings in the second quarter, and are now behind only Beijing.
“The favourable combination of rising rents and yield compression will lift capital values in Jakarta, providing investors with the prospect of strong returns,” said DTZ’s head of Asia Pacific research, Chua Chor Hoon. “Jakarta is attractively priced compared with the other ASEAN markets and, with prime property yields at circa 9%, the market is offering good income. We are forecasting total returns of 25% per annum over the next five years and this is driving our hot fair value recommendation.”
DTZ said many Asia Pacific property markets are expected to see solid rental growth over the next few years, lifting expected returns. Although bond yields have fallen across the region, prime property yields have remained largely stable, making property increasingly attractive compared with other asset classes.
