China and India to Dominate Divergent Picture in Asian Real Estate for 2016

The outlook for real estate in the Asia Pacific region remains largely positive heading into 2016, according to Colliers International’s 2016 Property Outlook. But pockets of weakness are starting to appear, according to the forecasts from Colliers International, while government policy continues to drive the behaviour of investors in many markets.

China is the proverbial “elephant in the room” for Asian real estate. That’s whether it is as a source of outbound capital or as an investment destination. Its economic slowdown and Beijing’s attempts to rebalance the domestic economy also spill over into its neighbors and trading partners.

“The focus remains firmly on China and the continued impact it has on all aspects of property activity,” Simon Lo, executive director, Asia research & advisory at Colliers international, says. “The dominance of China means that any changes to government policies in that country will continue to have ramifications throughout the whole region.”

Amid general caution and cost cutting among multinational finance companies, Chinese banks will continue to drive the office leasing in markets such as Hong Kong and Singapore in the year ahead. China’s outbound tourism is reshaping the hotel sector across Asia, rapidly becoming the No. 1 source of visitors to Japan.

India is cropping up on the radar for investors, in many cases for the first time. That is mainly as a result of its opening up of its domestic economy to international capital. Players active in India and China should see their cost of financing decline in 2016. In contrast, with U.S. interest rates set to increase, borrowing costs will be on the rise in Hong Kong and Singapore, although landlords should benefit from better yields.