1. EMERGING MARKETS
IN ASIA PACIFIC
A Cushman & Wakefield Research Publication
NOVEMBER 2013
EXECUTIVE SUMMARY
Real estate investment sentiment is turning favourably
towards the emerging markets. In the first half of 2013,
capital into the region’s emerging markets grew 49.3%,
as compared to the same period last year.
While an outright rebound in sentiment is not likely,
with higher volatility due to tapering risks and lingering
trade and fiscal deficits, the long-term growth story has
not gone out of fashion with investors.
State-linked companies account for a bigger portion of
the capital, as compared to core markets. Institutional
funds remained sidelined by a lack of investment grade
assets.
On the whole, real estate investment in the region’s
emerging markets are still evolving, with transparency
and market access as well as political risks continually
being assessed against the region’s economic potential.
1

2. EMERGING
MARKETS IN
ASIA PACIFIC
NOVEMBER 2013
EMERGING MARKETS IN ASIA PACIFIC
A Cushman & Wakefield Research Publication
EMERGING MARKETS OVERVIEW
Real estate investment sentiment in Asia Pacific has turned
favourably towards the emerging markets. In the first half of 2013,
capital into the region’s emerging markets grew 49.3%, as
compared to the same period last year.
Deals in the emerging markets have mainly surged due to the
amount of capital being invested into development land sites in
China’s tier two and three cities. The majority of land deals were
done in the second and third tiered Chinese cities, where
development opportunities, especially in residential developments,
drove investments.
Land sales in these markets increased by 60.7% year-on-year as
compared to the first half of 2012. Despite the clampdown in credit
growth, rapid urbanization and infrastructure needs will drive
growth in these lower-tiered cities, where an estimated 200 million
people is expected to flock to the cities in the next decade.
Excluding land sales, investment volume fell 49.6% across the
region. The fall was experienced across the region, save for
Vietnam, which saw some sizable deals struck for its retail and
hotel assets.
All sectors, save for industrial properties, declined. The increased
outlay into the industrial sector was seen across the region.
Investor interest into the region’s industrial sector this year is
palpable, driven by increasing intra-Asian trade, which spurs
demand for logistical infrastructure, in addition to the higher yields
that industrial assets provide, as compared to those in the office or
retail sector.
Foreign capital comprises about 5.6% of total capital invested in the
region’s emerging markets, down from the 7-9% achieved in
previous quarters. An overwhelming majority, at 90.7%, was
ploughed into development land sites, of which the bulk was bound
for the Chinese cities. Hospitality and retail investments made up
slightly more than 2% of foreign investments each. The bulk of
foreign investments were largely from within the region.
Similar to core markets, developers still remain the largest investor
group in the emerging markets; state-linked companies account for
a bigger portion of the capital, as compared to core markets. Statelinked companies ploughed in US$26.5 billion into emerging
markets’ real estate, an increase of 13.3% from the same period in
2012, which formed 23% of the capital invested. Institutional funds
remained sidelined by a lack of investment grade assets.
While an outright rebound in sentiment is not likely, with higher
volatility due to tapering risks and lingering trade and fiscal deficits,
the long-term growth story has not gone out of fashion with
investors. Capital raisings for Asia-focused funds have increased
from 2012 and the region continues to dominate in the emerging
market space.
On the whole, real estate investments in the region’s emerging
markets are still evolving, with transparency and market access as
well as political risks continually being assessed against the region’s
long-term economic potential as well as a deep structural shortage
of real estate. The challenge and the solution, to a certain extent,
lies in structuring investments, while positioned for the longer
term, mitigates medium-term uncertainty.
INVESTMENT VOLUME
120
US$bn
100
80
60
40
20
0
Core
Emerging
Source: Real Capital Analytics, Cushman &Wakefield Research
STATS ON THE GO (FIGURES IN USD MILLION)
SECTOR
H1 2012
HI 2013
Y-O-Y CHANGE
94,440.65
151,426.35
60.3%
3,678.55
1,883.24
-48.8%
249.79
395.46
58.3%
Retail
4,497.68
2,400.89
-46.6%
Residential
1,198.54
189.43
-84.2%
Hospitality
967.53
467.75
-51.7%
Development Site
Office
Industrial
Source: Real Capital Analytics, Cushman & Wakefield Research
INVESTMENT VOLUME (BY COUNTRY AS OF H1 2013)
India 14%
Vietnam
12%
China 62%
Malaysia 7%
Thailand 4%
Macau 1%
Indonesia
0.3%
Philippines
0.3%
Source: Real Capital Analytics, Cushman & Wakefield Research
NB: excludes land
2

3. EMERGING
MARKETS IN
ASIA PACIFIC
NOVEMBER 2013
EMERGING MARKETS IN ASIA PACIFIC
A Cushman & Wakefield Research Publication
CHINA
Thirdly, although it is less sophisticated and sustainable for a city’s
development, land transfer still remains as the major channel of
income for most local governments.
INVESTMENT CLIMATE/ECONOMIC OVERVIEW
China’s real estate investment landscape has been impacted by the
government’s clampdown on credit and cooling measures
implemented in the residential sector. In order to curb soaring
property prices, China’s securities watchdog stopped reviewing any
fundraising proposals from Chinese developers. The new
administration has signaled it is ready to tolerate a slower pace of
growth to remain on a long-term path of sustainable expansion. In
June, attempts to rein in the shadow banking system sparked a mini
credit crunch. Still, land transactions have rebounded this year in
tandem with the rise in property prices, as many went overseas to
source for funding sources.
In recent years, to accelerate the urbanization process, many local
governments start large-scale constructions simultaneously through
debt financing. According to the auditing of local governments of
provincial cities last year, nine of them bore a debt ratio which was
higher than 100%. Approaching the due date of debts, land transfer
become the most effective way of reimbursement of debt.
Therefore, land transactions are becoming even more active this
year
STATS ON THE GO (FIGURES IN USD MILLION)
SECTOR
H1 2012
HI 2013
Y-O-Y CHANGE (%)
92,324.43
148,381.08
60.7
2633.56
944.76
-64.1
40.14
222.10
4.5
4,284.89
1,918.76
-55.2
Residential
811.18
105.29
-87.0
Hospitality
459.45
109.47
-76.2
Development Site
TRANSACTIONS OVERVIEW
In the first half year of 2013, in addition to the durative upswing of
the first-tier cities’ land market, the second and third-tier cities
have also witnessed a higher growth rate in land transaction, in
terms of covered area and transfer fee. For example, in June, four
well-located parcels in Wuhan were sold at a bidding price of
RMB2.5 billion, among which one parcel was won by Yangtze River
Land at RMB512 million – a new historic high in the city.
The fast growth of land transactions in the second and third-tier
cities is promoted by three major stimuli. First of all, the
implementation of the sustainable urbanization policy has
encouraged the development of the second and third-tier cities and
the expectation of a rigid demand in real estate market. In the face
of stiff competition and limited land supply in the first-tier cities,
more investments of developers have been attracted to markets in
the second and third-tier cities.
Secondly, with the influence of the policy of “New State 5” being
absorbed by the market gradually and the gradual recovery of the
global and domestic economies, a favorable expectation is
generated for the real estate market and real estate investment still
remains as an effective means for the maintenance or increase of
value.
With cheaper price and more effective supply, more individual and
institutional investors have been attracted to the second and thirdtier cities, promoting the development of local real estate market
and the increase of land transactions.
Office
Industrial
Retail
Source: Real Capital Analytics, Cushman & Wakefield Research
INVESTMENT VOLUME (TOP CITIES AS OF H1 2013)
US$m
10,625
Land
8,500
Others
6,375
4,250
2,125
0
Source: Real Capital Analytics, Cushman & Wakefield Research
SELECTED MAJOR TRANSACTIONS (YTD)
PROPERTY NAME
PROPERTY
TYPE
PROVINCE/CITY
PURCHASER
SELLER
CONSIDERATION / PURCHASE PRICE
RMB$ MILLION
US$ MILLION
UNIT PRICE
US$/SF (NLA)
Huangpu Avenue
Devt site
Guangzhou
Greenland Group
Govt
6,400.0
1,028.1
1,640.7
Section G Gailanxi Group
Devt site
Chongqing
China Vanke
Govt
5,372.2
875.6
288.1
Yunpu Industrial Park
Devt site
Guangzhou
Kaisa
Govt
4,556.6
742.7
361.7
Govt
3,990.0
640.9
2,545.3
Huangpu Avenue
Devt site
Guangdong
Changjiang Enterprise
Group
Shenzhen Century Place (27 Flrs)
Office
Shenzhen
Bank of Communications
Hutchison Whampoa
4,000.0
642.8
1,012.2
Tianjin City Tower
Office
Tianjin
China Pacific Insurance
City Developments
585.0
94.8
248.3
Suzhou CS INCITY
Retail
Suzhou
Carlyle Group
SCP Group
2,312.9
183.8
256.2
Source: Real Capital Analytics, Cushman & Wakefield Research
3

4. EMERGING
MARKETS IN
ASIA PACIFIC
NOVEMBER 2013
EMERGING MARKETS IN ASIA PACIFIC
A Cushman & Wakefield Research Publication
INDIA
CORPORATE TRANSACTIONS
INVESTMENT CLIMATE/ECONOMIC OVERVIEW
Though the first five months of the year saw net foreign
institutional investor inflows, there has been a large exodus of
capital from stock markets since June due to the likelihood of
tapering by the US Fed, which led to global markets being in
turmoil.
A high trade deficit on account of petroleum and gold imports
caused the current account deficit to touch a record high of 4.5%
of GDP at US$87.8 billion in 2012-13 according to Reserve Bank
of India. This led the government to reduce non-essential imports
by imposing restrictions as well as raising duties. The deficit was
further compounded from May to June as the Rupee depreciated
by approximately 10% against the US Dollar since the beginning of
the year.
Meanwhile, in order to revive investor interest in Special
Economic Zones (SEZ), minimum land requirements were reduced
by half, while they were done away with for IT-ITeS SEZ during
the first half year. The government also permitted the transfer of
ownership of SEZ units through sale. Other regulatory reforms
saw a relaxation in the norms for availing External Commercial
Borrowings by housing finance companies. Additionally, FDI norms
were enhanced in a number of sectors such as insurance, aviation,
defense production, etc.
TRANSACTIONS OVERVIEW
In contrast to private equity transactions, corporate transactions
in real estate increased by 8% over the same quarter last year, to
hit US$614 million in the first half of 2013. Both the number and
quantum of transactions increased over the last quarter. NCR saw
the highest amount of transactions worth US$253 million due to a
single transaction in the peripheral location.
OUTLOOK
Investments in the real estate sector are expected to be stable in
the next six months, as many investors remain cautious due to the
rupee’s weakness. However, they are still committed to investing
in the Indian markets as developers continue to face liquidity
issues and are in dire need of funding. In addition, incomegenerating assets are expected to remain popular with funds.
Structured deals involving debt financing is also being embraced by
investors to take indirect stakes in projects, which mitigates shortterm risk and allows long-term exposure to one of the world’s
emerging giants.
STATS ON THE GO (FIGURES IN USD MILLION)
SECTOR
H1 2012
HI 2013
Y-O-Y CHANGE
Development Land
945.5
612.7
-35.28
Office
421.4
193.4
-54.1
Hospitality
78.2
-
NA
Residential
306.9
152.2
-50.4
20.2
-
NA
Others
PRIVATE EQUITY INVESTMENTS
While private equity (PE) investments in real estate, which reached
US$276 million in the first half of 2013, fell 46% as compared to
first half of 2012, PE funds continue to show keen interest in the
market with a number of deals in discussion. This decline in the
quantum of PE investments was essentially due to the lower
number of deals (13 in the first half of 2013), as the average ticket
size of deals remained same.
The total value of investments in the residential segment reached
US$156 million in the first half of 2013, a drop of 48% over last
year. The total value of investments in the office segment was also
lower at US$118.1 million. However, investments in ready office
space are strong, reflected by the continuous growth of core
investors with over US$1.3 billion invested in ready office spaces
during the last three years. In 2013, the highest value of PE
investments was in Pune at US$131.6 million, followed by Mumbai
at US$67.5 million, NCR at US$38.8 million and Bengaluru at
US$16.9 million.
Source: Real Capital Analytics, Cushman & Wakefield Research
INVESTMENT VOLUME (TOP CITIES AS OF H1 2013)
US$m
300
250
200
150
100
50
0
NCR
Pune
Mumbai
PE
Chennai
Hyderabad Bengaluru
Others
Corporate Transactions
Source: Real Capital Analytics, Cushman & Wakefield Research
Note: USD 1 = INR 59.27
SELECT MAJOR TRANSACTIONS (H1 2013)
PROPERTY NAME
PROPERTY TYPE
CITY
PURCHASER
SELLER
CONSIDERATION / PURCHASE PRICE
INR MILLION
US$ MILLION
DLF Hyderabad
Devt Site
Hyderabad
Suvarnabhoomi Developers
DLF
6,500
109.6
NA
Chennai Project
Devt Site
Chennai
Ceebros
Viceroy
4,800
80.9
NA
Eon Free Zone
Office
Pune
Blackstone
Panchshil Realty/Ireo Mgmt Ltd.
4,500
75.9
NA
Pune
IDFC Alternatives
Paranjape Schemes
2,500
42.1
NA
Blue Ridge
Office
UNIT PRICE
US$/SF (NLA)
Source: RCA, Cushman & Wakefield Research
4

5. EMERGING
MARKETS IN
ASIA PACIFIC
NOVEMBER 2013
EMERGING MARKETS IN ASIA PACIFIC
A Cushman & Wakefield Research Publication
VIETNAM
increasing at a local level and will be the focus of investment
activity in the short to medium term.
INVESTMENT CLIMATE/ECONOMIC OVERVIEW
However, distressed assets have not been in abundance despite
the ongoing Non-Performing Loans of local banks. Lack of liquidity
in the financial markets will mean there will be more forced sales
in 2014.
As of the end of the first half of 2013, there have not been clear
signals of market recovery although a period of stabilization has set
in. Growth in second quarter GDP remained at 4.9%, similar to
that in the first quarter and is expected to pick up speed in the
later part of the year, while inflation is expected to slow to 6.8%
this year from 9.3% in 2012. Despite recent volatility in emerging
market currencies, the Dong has remained relatively stable.
Although the interest rate is on a downward trend, currently at
12-13%, bank loans in real estate developments are still limited.
MARKET OVERVIEW
Vietnam has witnessed the most active first six months of a year in
the property investment market since the Global Financial Crisis,
signaling a rebounding foreign investment appetite into Vietnam
and an increasingly more sophisticated market.
The uncertain legal infrastructure continues to contribute to a lack
of transparency in the market, as do the opaqueness of domestic
firms. The government’s move to establish a state company, the
Vietnam Asset Management Company, to mop up the financial
sector’s soured loans has not had an immediate impact, and its
effectiveness remains to be seen.
STATS ON THE GO
SECTOR
H1 2012
HI 2013
Office
133.3
50.2
-62.3%
Hospitality
179.2
246.0
37.3%
-
319.3
NA
11.9
34.7
191.6%
Retail
Investments into Vietnam’s real estate market for the half year
through June more than doubled from a year ago to reach
US$669.4 million. This was mainly due to the sale of Vincom
Centre A, which was snapped up by Vietnam Infrastructure and
Property Development Group for US$313.97 million.
Y-O-Y CHANGE
Residential
Source: Real Capital Analytics
Operating assets, particularly office buildings, are the most popular
investment targets for foreign investors, notably Singaporean,
Japanese and Korean organizations that are reducing their
construction and leasing exposure on new developments.
However, there remains a distinct lack of good quality, wellmanaged saleable stock in both HCMC and Hanoi.
Well-situated development sites in both major cities remain
sought after. However, prospective developers anticipate a 30-40%
correction in land values before taking on green field development
investments. This shift has not been evident, despite the recent
correction in the market, and as a result, a lot of development
projects still remain unfeasible.
OUTLOOK
INVESTMENT VOLUME
US$m
800
700
600
500
400
300
200
100
0
2008
2013 will likely see the highest transaction volumes in operating
assets to date. There is an expectation that regional and
international investor interest will gain as the real estate market
reaches the bottom of the cycle. Merger and acquisition activity
2009
2010
2011
2012
H1 2013
Source: Real Capital Analytics, Cushman & Wakefield Research
SELECTED MAJOR TRANSACTIONS (YTD)
PROPERTY NAME
PROPERTY TYPE
CITY
PURCHASER
SELLER
CONSIDERATION/PURCHASE PRICE
VND MILLION
US$ MILLION
UNIT PRICE
US$/SM (NLA)
Centre Point
Office
HCMC
Mapletree Investments
Japan Asia Land
52
1,900
Vincom A
Complex
HCMC
VIPD
Vingroup
470
NA
Sheraton Nha Trang (66% stake)
Hotel
Nha Trang
Kinh Do Corp
VinaLand
42
NA
Life Resort Hoi An
Resort Hotel
Hoi An
MINT
IBUS
9.6
NA
Life Resort Quy Nhon
Resort Hotel
Quy Nhon
MINT
IBUS
6.4
NA
Source: Real Capital Analytics, Cushman & Wakefield Research
5

6. EMERGING
MARKETS IN
ASIA PACIFIC
NOVEMBER 2013
EMERGING MARKETS IN ASIA PACIFIC
A Cushman & Wakefield Research Publication
SOUTHEAST ASIAN CITIES
INVESTMENT MARKET OVERVIEW/OUTLOOK
JAKARTA
REGIONAL OVERVIEW
The success of the region in weathering the impact of 2008’s
financial crisis has awoken the world to the economic potential of
Southeast Asia. Favorable demographics and a large domestic
consumption base have enabled economies like Indonesia and the
Philippines, to remain relatively insulated to the drop in external
demand. With costs in China spiraling after more than two decades
of its economic liberalization, industrialists are also looking to plant
their factories in the Indochinese economies.
However, while prospects of the Fed tapering have exposed the
current account deficits that some economies are running, the
consensus is that another 1997 Asian-styled crisis is unlikely to
occur, due to the region’s better macroeconomic fundamentals.
Investments will likely see a pullback in the short term, as asset
returns will be impacted by further depreciation of currencies.
Real estate investments in the Southeast Asia region will remain
dominated by intra-regional investors and funds with higher risk
profiles. Operating assets in the retail sector have attracted the
bulk of capital since 2008, due to the consumption story. However,
the region’s potential goes beyond that and as investors look to
diversify, along with rising foreign investments, the industrial sector
should gain some traction. Investments into the region’s real estate
markets are expected to be sustained, as its long-term
fundamentals are played out, supported by intra-Asian capital flows.
STATS ON THE GO
SECTOR
H1 2012
HI 2013
Y-O-Y CHANGE
Development Site
1,189.42
2,225.38
87.1%
Office
264.49
301.91
14.1%
Industrial
209.66
90.87
-56.7%
Retail
191.14
448.12
134.4%
Residential
53.90
74.29
37.8%
Hospitality
418.38
358.28
-14.4%
Source: Real Capital Analytics
US$ Million
3,900
2,600
1,300
0
2008
2009
Kuala Lumpur
Bangkok
Source: Real Capital Analytics
2010
Manila
However, most economists believe it is too early to see the
current developments as a threat to longer-term growth. Policymakers have responded promptly. In August, Indonesia announced
a package of fiscal and monetary policies in response to the
pressures in the financial and trade markets. The central bank, Bank
Indonesia, also increased interest rates to 7.25% in September.
The continuing economic growth, Rupiah currency’s stability,
increasing household incomes, and potential market growth
continues to be a pre-requisite to foreign property investors, even
though the fundamentals for property demand and supply in Jakarta
have not altered greatly.
Political uncertainty is becoming a concern to foreign investors.
Even though the government has started to show its commitment
for clean and pro-market governance, the real results of this
initiative remain to be seen. Next year, Indonesia will hold a
parliamentary election in April and a presidential election in July. In
the past, the impact of these elections had proved temporary with
little impact on the property market. Given the recent volatility in
the emerging markets, investors are likely to adopt a wait-and-see
attitude.
Limited investment transactions were recorded in Jakarta. While
foreign investors are cautious, the lack of deals is also a result of
the lack of good investment projects, rising land prices, and pending
infrastructure improvements. As with the capital values, investment
yields of the Jakarta property markets have been relatively stable.
There are still some opportunities for cash-rich investors, those
who have secured reliable sources of finance or those who have
secured prime lands for property development; they will still
benefit from the property markets at various stages of the property
cycles.
Local investors have been more successful in acquiring property
assets in Jakarta, especially land, high-end residential and office
buildings, as they are generally better acquainted with local
conditions. Whereas Bali and Jakarta remain the preferred
investment destination for hotels among foreign investors, very few
deals have been struck. The limitation is only deal sizes as very few
can secure local deals of more than US$100 million.
INVESTMENT VOLUME H1 2013
5,200
Unexpectedly, there are signs of pressure in the Indonesia
economy. Until the first quarter of 2013, the economy seemed to
be doing well. But growth, as of September 2013, has slowed from
6.4% to 5.9%; inflation is rising while the balance of payments is
under pressure along with a weakened Rupiah.
2011
Ho Chi Minh City
2012
Jakarta
In addition, the slow disbursement of the state budget for
infrastructure development is threatening growth, which has
already been held up by a decline in the country’s exports. This
condition and the lack of investors for public infrastructure
developments, coupled with the associated problems in land
acquisition and clearance, have caused uncertainty with regard to
the completion schedule of planned infrastructure projects, and
hence made property investment decisions difficult.
6

7. EMERGING
MARKETS IN
ASIA PACIFIC
NOVEMBER 2013
EMERGING MARKETS IN ASIA PACIFIC
A Cushman & Wakefield Research Publication
MANILA
The economy continued to perform well in the second quarter of
2013, growing by 7.5% in the same period, spurred by aggressive
government spending, increased investments in fixed capital, and
high consumer expenditure. With the expected growth in demand
for office spaces not only in Metro Manila but in provincial areas as
well, investments in office properties are expected to continue
through 2014. In 2012, foreign investments in real estate activities
totaled US$163.5 million, up from 2011’s US$135.2 million. As of
May 2013, foreign investments attributed to real estate activities
already amounted to US$105.9 million, more than half of what was
accumulated in 2012.
Recent investment upgrades by international rating agencies, the
latest of which was Moody’s, have boosted business confidence in
the country. Reasons for these upgrades include the country’s
ability to moderate inflation, its economic resilience, improvement
in fiscal management, and a strong policy-making framework.
There have been numerous development projects happening in
different areas in the Philippines. These projects are visible not only
within Metro Manila, but in other provincial areas as well.
Developers have been snapping up opportunities to develop
properties which have long been in the land bank, and newly
acquired properties which have the potential to attract investments.
One of the more aggressive real estate developers, Ayala Land Inc.
(ALI), has been investing in development land for commercial
districts development. One of the significant investment projects of
ALI is Vertis North, a mixed-use project located in Quezon City,
where the company is investing PHP65 billion.
Another ALI investment project, the Circuit Makati, a
redevelopment of the Sta. Ana race track, would entail an
investment of PHP20 billion on the entertainment complex. Both of
these developments are expected to be completed between 2015
to 2016. Moreover, another real estate developer, Megaworld, has
recently increased its programmed investment project in the Iloilo
Business Park to PHP35 billion, making it its single largest project
located outside Metro Manila.
It is evident that most real estate developers are focused on
investing in development land, and converting it to a mixed-use
community, usually comprising office, residential and leisure
developments.
With the economy on a firmer footing, investments into the
country have become more viable. The Real Estate Investment
Trust law, once passed, would also further strengthen the country’s
real estate investment market. However, there are several key
issues, such as stringent tax rules, which are blocking its
implementation.
institutional funds looking for core assets to park their money in.
However, Malaysia’s legal system and lack of a capital gains tax
(after holding a property for five years) are plus points, as well as
its open-door policy to foreign investments.
For the first of the year, development sites attracted the bulk of
the capital spent on investment deals, at US$565.0 million. The
largest transaction was WCT’s acquisition of land, which the
company intends to develop an integrated-use property.
Foreign capital came in the form of Mitsui Fudosan’s joint venture
with Malaysian developer, E&O, to develop The Mews Services
Residence in the heart of the capital’s CBD, a stone’s throw from
the KLCC precinct. The city is reportedly to be on the radar of
Japanese investors, who are looking to diversify from China and its
home market.
Investments into the capital’s real estate market will likely gain
momentum in the second half, after the country’s general election
saw the ruling coalition retain power. As the government’s
Economic Transformation Program revs into its mid-term,
investments could pick up, due to multiplier effects from
infrastructure projects. However, the program has elevated the
country’s debt levels, which would probably weigh on some of the
government’s plans in the short term.
One of the favored sectors in the capital is the retail sector, as the
push towards a high-income economy is expected to boost wages
and increase consumption; its urban population is also expected to
increase. The city’s well-managed malls will continue to attract the
entry of major international retailing brands.
BANGKOK
Bangkok’s real estate market has remained resilient, weathering the
uncertain global economic climate as well as a volatile domestic
political situation. Still, investments into the capital’s real estate
sector recovered somewhat in 2011, after the last election installed
the current ruling party.
Having been through at least a coup in each decade since 1932,
political instability remains a legitimate concern for investors in the
kingdom. Other major bugbears include regulatory lags and political
inertia, which frequently delay the implementation of policies and
create uncertainty for investors, especially foreign capital, delaying
funding for vital infrastructure projects which Bangkok’s real estate
needs.
Still, there are number of positives for Thailand and its capital city.
KUALA LUMPUR
The city’s popularity as a tourist destination means investors view
hotel assets favorably, and the fundamentals are improving. Tourist
arrivals to the country are expected to increase to 24 million this
year, up by an expected 20% and a huge leap from the 3 million
achieved 12-15 years ago. So far, occupancies and RevPAR figures
are increasing, which would lead to higher room rates.
The capital remains the country’s most attractive real estate
market, which is relatively well-regulated but is much more
affordable when compared to the developed markets in the region.
For Kuala Lumpur’s real estate, the biggest impediment to more
investments is transparency, which has discouraged most foreign
So far, foreign institutional funds have mostly banked on the prime
residential sector in Bangkok, where development land is in short
supply, placing upward pressure on prices and rentals of existing
stock. In contrast, office investments remain relatively low, due to a
lack of investable assets.
7

8. EMERGING
MARKETS IN
ASIA PACIFIC
NOVEMBER 2013
EMERGING MARKETS IN ASIA PACIFIC
A Cushman & Wakefield Research Publication
In the first half of this year, the only foreign presence was a
US$23.3 million investment in units of a condominium project,
located in an expatriate community, by Aramis Capital.
However, expectations for a REIT framework to be introduced by
next year should catalyze and transform real estate investment in
Thailand. While there seems to be still some tax hurdles to clear,
developers are already expanding their sources of rental incomes,
to be injected into REITs when the framework is successfully
implemented. Big scale infrastructural projects should also give the
real estate market a boost once they get off the planning stages.
SELECTED MAJOR TRANSACTIONS Q2
PROPERTY NAME
PROPERTY TYPE
COUNTRY/CITY
PURCHASER
SELLER
CONSIDERATION / PURCHASE PRICE
LCY MILLION
US$ MILLION
Liberty Square
Office
Bangkok/Thailand
KSL Group
NA
1800.0
60.5
140.5
Bang Chalong
Industrial
Bangkok/Thailand
WHA Fund
WHA
1615.0
52.7
74.6
Ideo Thonburi
Dev Site
Bangkok/Thailand
Ananda Devt
NA
738.7
24.3
230.8
Epicentrum Plot
Dev Site
Jakarta/Indonesia
BSD City
Bakrieland
868,930.0
90.0
278.6
Mixed Development
Office
Jakarta/Indonesia
GIC Singapore
Ragawali Group
3,486,000
350.0
NA
Jalan Awan Cina (future
Mixed Development)
Dev Site
Kuala Lumpur/
Malaysia
WCT Bhd
Eng Lian Enterprise
450.0
147.2
58.8
Icon at Tun Tazak-East
Wing
Office
Top Glove
Law Tein Sing/Datin Saw
Geo
226.0
72.9
262.2
Tower 6 Horizon Phase 2
Office
Lembaga Tabung Haji
UOA Group
102.2
33.4
229.0
Midas Hotel
Hospitality
LRWC
Eco Leisure & Hospitality
750.0
18.3
149,000/key
Kuala Lumpur/
Malaysia
Kuala Lumpur/
Malaysia
The Phillippines/
Manila
UNIT PRICE
US$/SF
Source: Real Capital Analytics, Cushman & Wakefield Research
8

9. EMERGING
MARKETS IN
ASIA PACIFIC
NOVEMBER 2013
EMERGING MARKETS IN ASIA PACIFIC
A Cushman & Wakefield Research Publication
For more information about C&W Research,
please contact:
For more information about C&W Capital Markets,
please contact:
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Managing Director, Capital Markets
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john.stinson@ap.cushwake.com
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