Singapore’s Chevron House - Photo: AP

JAKARTA (TheInsiderStories) – Asia Pacific (APAC) real estate transaction volumes have hit a historic high of US$86 billion in the first half (1H) of 2019, an increase of 6.0 percent year on year, despite property investment dropping by 19 percent globally, according to a recent report by property consultancy JLL Global Capital Flows.

With the strong first-half-year, the report reveals that the region’s momentum is likely to moderate over the rest of the year, while investment levels are projected to reach a new full-year high in 2019.

“Due to the tightening of yields in core markets across the globe, particularly in Europe and the United States, investors are made to look beyond their domestic markets in search of higher returns,” said Stuart Crow, JLL’s chief executive officer of Capital Markets Asia Pacific.

He adding that joint venture and consortium structures continue to increase in popularity for large deals across the region as investors seek a more direct approach and see the benefit in partnering long-term with like-minded groups.

JLL’s data shows that real estate transaction levels in APAC were given a boost by capital investment in Singapore, which nearly doubled in the 1H of the year, as it rebounded from a 2018 slump.

The city’s office sector accounted for nearly $4.6 billion in transactions during the period, to take up the largest share of investment. That investment tally was a 53 percent increase over the $3 billion recorded during the first six months of last year, although still a notch below the $4.7 billion recorded in 2017.

The spike in investment has been driven in part by large-scale transactions such as Oxley Holdings $1.025 billion sales of Chevron House, a 32-story commercial building at Raffles Place, to US real estate fund manager AEW Holdings, in a deal which was first signed in April.

“Singapore’s office sector has become a favored investment destination over the last 12 months, largely supported by the market’s very favorable demand-supply dynamics and a benign interest rate outlook,” said JLL’s head of Southeast Asia, Chris Fossick.

Investors have been drawn by the city’s rising office rents, which the JLL regional chief said were likely to push capital investment up to a decade-long high this year.

While investment in Singapore has surged, figures for Indonesia’ Greater Jakarta saw a slump, amid increased political tensions triggered by April’s presidential election.

Arief Raharjo, research director of Cushman and Wakefied Indonesia, said all indicators showed a significant drop in business, with average sales dropping to a range from 3.4 to 22.9 units per residential area. In the second half (2H) of 2018, average sales reached up to 26.3 units.

Meanwhile, the value of transactions dropped 11.9 percent to Rp 33.7 billion ($2.35 million) on average in each residential area, per month, from Rp38.2 billion in each residential area per month in the 2H of 2018.

Cushman and Wakefield noted that sales in Tangerang, Banten, were higher than in Jakarta and its satellite cities, with sales reaching 27.7 units per residential area with a transaction value of nearly Rp51.7 billion per month.

The company also noted that sales in Greater Jakarta were still dominated by the middle-class market segment, with priced from Rp1 billion to Rp1.7 billion contributing 36.5 percent to the total transactions, followed by the Rp500 million to Rp1 billion segment with a contribution of 27.8 percent.

US$1=Rp14.300

Written by Lexy Nantu, Email: lexy@theinsiderstories.com