Asia Property Weekly Summary
Core Content Overview
This summary presents a detailed overview of the Asia property market, highlighting key developments in residential and commercial sectors across China, Hong Kong, India, Japan, and Singapore, along with upcoming events and market performance data.
Key Market Developments
China
- Residential Market: Transaction volume decreased by 22% week-on-week but increased by 10% year-on-year, with tier 2 cities outperforming. Inventory dipped by 0.2% week-on-week, while CMI and CAI increased by +2.0 and +1.3 ppts respectively.
- IPO Resumption: China plans to resume IPOs by the end of 2015, ending a 4-month freeze, as the stock market recovers from the summer sell-off.
- Real Estate Reforms: A rural reform plan is set to improve rural collective property rights systems by 2020.
- Price Growth: Shanghai and Beijing ranked 7th and 8th globally for home price growth, with annual increases of 14% and 12% respectively.
- Property Tax: The Beijing Real Estate Unified Registration System is being implemented, potentially laying the groundwork for property tax.
Hong Kong
- Residential Sales: Estimated 124 units sold in the week ending Nov 8, down 18% from the previous week and 52% below the 3-month average.
- Secondary Market Prices: Declined 0.9% week-on-week as of Nov 1, but are up 6.3% year-to-date.
- Land Tender Cancellation: The government cancelled a tender for a residential plot in Tsing Yi due to bids below the reserve price, marking the first cancellation in 19 months.
- Office Portfolio: Swire Prop reported 99% occupancy in its overall office portfolio for the first 9 months of 2015, with passing rent at Pacific Place down by 2% and increases at City Plaza, Taikoo Place, and One Island East.
- Transaction Volume: A record low of 2,035 transactions in October, down 28% month-on-month from September, with a total transaction value of HK$13.833bn.
India
- Developer Interest: Some Chinese real estate developers are exploring strategic partnerships and JVs in India for large residential projects.
- Land Tender: A consortium led by City Developments won a residential plot near Serangoon MRT in Singapore at S$710 psf ppr, higher than the S$648 psf ppr from 2014.
Japan
- Mitsubishi Estate: Completed Big-Nagoya Building on Nov 3 with a GFA of 148,000sqm.
- Nomura Real Estate: Announced a medium-term plan targeting ¥85bn in op. profits for FY3/19, with residential op. profits expected to drop to ¥30bn due to the consumption tax hike in 2017.
- Office Price Index: Tokyo Central area office prices reached ¥8.71mn per tsubo for class A buildings, up 20.5% year-on-year.
Upcoming Events
- 10-Nov: China - CPI, PPI; India - Exports, imports, trade balance.
- 11-Nov: China - Retail sales, industrial production; Hong Kong - Link REIT 1H FY16 results.
- 12-Nov: India - Industrial production, CPI.
- 13-Nov: Hong Kong - GDP; Japan - Industrial production.
- 16-Nov: Japan - GDP.
Key Market Performance
Price Performance (Market-cap weighted)
| Market |
1-wk |
1-mo |
6-mo |
Underlying P/E |
Dividend Yield |
% +/- Fwd. NAV |
| China (off-shore) |
4 |
12 |
-3 |
17 |
10.2 |
3.8 |
| China (on-shore) |
5 |
15 |
1 |
-10 |
10.2 |
2.1 |
| Hong Kong |
-2 |
1 |
-8 |
-19 |
13.6 |
3.4 |
| India Developers |
-1 |
-4 |
-3 |
-11 |
27.6 |
1.2 |
| Japan Developers |
-4 |
-4 |
-12 |
-11 |
27.3 |
0.6 |
| Japan REITs |
-1 |
1 |
-2 |
-8 |
25.4 |
3.2 |
| Singapore Developers |
3 |
7 |
-4 |
-14 |
21.5 |
1.8 |
Top and Bottom 5 Performers of the Week
| Stock |
1-wk |
1-mo |
| Sunac |
11 |
15 |
| Fond |
9 |
13 |
| Longfor Properties |
8 |
14 |
| OCT |
7 |
23 |
| China Jinnao |
7 |
10 |
| Godrej Properties |
-7 |
-2 |
| Tokyo Tatemono |
-6 |
-2 |
| Nomura Real Estate HD |
-6 |
-1 |
| Sumitomo |
-6 |
-7 |
| Tokyo Tatemono |
-5 |
-6 |
Buy/Sell-Rated Stocks
Buy-Rated (Market cap > US$2 bn)
| Stock |
Upside Potential (%) |
| Agile |
86 |
| Tokyo Tatemono |
76 |
| Shaoan |
75 |
| Country Garden |
58 |
| KWG Prop. |
49 |
Sell-Rated (Market cap > US$2 bn)
| Stock |
Downside Potential (%) |
| Gemdata Corp. |
-29 |
| Evergande |
-28 |
| Champion REIT |
-12 |
| Suntec REIT |
-3 |
Buy-Rated (Market cap < US$2 bn)
| Stock |
Upside Potential (%) |
| Prestige Estate |
81 |
| Sobha Developers |
58 |
| Oberoi Realty |
45 |
| China Lodging |
7 |
Sell-Rated (Market cap < US$2 bn)
| Stock |
Downside Potential (%) |
| Godrej Properties |
-22 |
| Mandarin Oriental |
-8 |
Key Research Highlights
- Mitsui Fudosan: Above expectations with no change in strategy despite leasing/sales upside.
- Wharf Holdings: Retail sales worsened in 3Q, but China contract sales exceeded budget.
- Ciputra Development: Positive on LT fundamentals but downgraded to Neutral due to valuation concerns.
- Nomura Real Estate: Shift to asset-heavy strategy raises concerns.
- Joy City Property Ltd.: Quality mall operator but with low returns, initiated at Neutral.
- DLF: In line with expectations, debt continues to increase, but costs are cut.
- NTT Urban Development: 1H in line, full-year guidance hike on property sales gains; Buy rating.
Summary of Market Trends
- China: Resumes IPOs, residential prices show mixed performance, with tier 2 cities outperforming.
- Hong Kong: Declining residential prices, low transaction volume, and land tender cancellation.
- India: Chinese developers exploring JVs and strategic partnerships.
- Japan: Completed new developments, revenue expectations impacted by consumption tax hike.
- Singapore: City Developments wins land tender at a high price, BlackRock still negotiating for Asia Square Tower 1.
Conclusion
The Asia property market shows a mix of performance and developments, with China resuming IPOs and Hong Kong experiencing a decline in residential prices. Strategic investments and market reforms are ongoing, with key players like Mitsubishi Estate and City Developments making notable moves. Upcoming events will provide further insights into market trends and performance.
