APAC Cap Rates

Q1 2023

Valuation & Advisory Services

 APAC Cap Rates Q1 2023
2

Overview
• Overall sentiment was still overshadowed by interest rate and inflation pressure in most markets. Large ticket transactions
are still lacking.
• Different markets had varying degrees of influence on this situation – Hong Kong and China were still considered to be at a
low level, while New Zealand was broadly impacted by the monetary measures implemented to cool down inflation.
• The big mover was the office sector, with 12 out of the 20 cities covered in this report seeing changes. Investors were
increasing their exposure as buy- and sell- sides are resetting their pricing expectations.
• The resumption of domestic and international travel in all markets was having a positive impact in the retail landscape. We
have started to see movements in some markets after long, lacklustre performance in the brick-and-mortar world.
• Cap rates in Auckland have increased across all sectors, with office and industrial cap rates rising for four consecutive
quarters. The first quarter saw few transactions as investors remain cautious due to the Reserve Bank of New Zealand's
continued interest rate hikes to curb inflation. The uncertainty around the rate at which interest rates will peak and when
this will occur, combined with the impact of a slowing economy on investor sentiment, is likely to hamper sales activity.
 APAC Cap Rates Q1 2023
3

Office sector Retail sector Industrial sector

• There was an upward movement QoQ in all • The current high inflationary environment in • The demand for industrial workspace in
Australian markets except Perth. There has Australia will increasingly impact retail spending Auckland remains strong, with vacancy rates
been a hiatus in transaction activity in Q1 2023, throughout 2023, with discretionary spending hovering near record lows. As of February,
particularly across CBD markets, as capital being the most vulnerable. In the face of rising overall vacancy stood at just 1.9%. There are
continues to take a cautious approach. However, interest rates and borrowing costs, retail cap signs of slowing development activity, as a
there are several sales campaigns underway rates have risen in Adelaide, Melbourne & result, occupier conditions are unlikely to ease
across all capital cities, which can hopefully Sydney for two quarters. This has applied to not throughout 2023. While occupier fundamentals
provide clearer guidance on pricing over Q2. only Class A assets but to all subclasses remain robust, investor sentiment is being
throughout Q1. Transaction volume has affected by rising interest rates. Consequently,
• In Hong Kong, office market sentiment slightly remained below average as investors continue cap rates are likely to continue rising over Q2.
recovered following reopening of the Hong to assess the macroeconomic landscape.
Kong–mainland China border. Investors mainly
aimed at capital appreciation rather than stable
rental income. The vacancy rate of the office
sector has remained high at 14.7% since Q4
2022. Due to weaker investor confidence in the
office market, the cap rate has expanded
further.
• The Jakarta office market is under pressure,
with a high vacancy rate in an oversupplied
market, and rents are dropping. However,
capital values remain steady as the buyer–seller
gap is standing firm with no transactions to
support the pricing. This has caused the cap rate
to drop, but we are expecting to see a turn when
the pricing resets.
 APAC Cap Rates Q1 2023
4

Adelaide 3.60% 6.80% Australia

The most movement market The most movement sector Auckland 5.25% 6.70% New Zealand

Auckland Office Bangkok 6.47% 2.83% Thailand

Beijing 4.30% 0.70% China

Bengaluru 10.0% 6.44% India

Brisbane 3.60% 6.80% Australia

Canberra 3.60% 6.80% Australia

Ho Chi Minh City 9.40% 3.35% Vietnam

Hong Kong 3.14% 1.70% Hong Kong

Jakarta 7.90% 4.97% Indonesia

Manila 6.25% 8.60% Philippines

Melbourne 3.60% 6.80% Australia

Cap Rate QoQ movements Mumbai 10.0% 6.44% India

Office Perth 3.60% 6.80% Australia

Retail Korea
Seoul 5.32% 4.20%
Industrial
Shanghai 4.30% 0.70% China
Interest Rate
Inflation Rate Singapore 4.50% 6.05% Singapore
Scale Direction
Sydney 3.60% 6.80% Australia
Small Down
Taipei 2.97% 2.35% Taiwan
Medium Flat

Large Up Tokyo 0.07% 3.30% Japan

 APAC Cap Rates Q1 2023
The below rates are gross yields for Class A assets in prime locations in their class in the respective
locations based on survey results from our professional valuers / appraisers.

Office Retail Industrial Interest Inflation

City Market
Low High QoQ Low High QoQ Low High QoQ rate rate
Adelaide 6.25% 7.00% 5.25% 6.75% 5.50% 6.25% 3.60% 6.80% Australia
Auckland 4.75% 6.00% 5.50% 7.25% 4.75% 5.50% 5.25% 6.70% New Zealand
Bangkok 5.25% 5.75% 5.50% 6.00% 8.00% 9.00% 6.47% 2.83% Thailand
Beijing 5.00% 5.75% 5.00% 6.25% 4.75% 5.75% 4.30% 0.70% China
Bengaluru 8.25% 8.75% 9.50% 10.75% 7.00% 7.25% 10.00% 6.44% India
Brisbane 5.25% 6.00% 4.75% 6.50% 4.25% 5.50% 3.60% 6.80% Australia
Canberra 5.25% 6.00% 5.00% 6.75% 4.75% 5.75% 3.60% 6.80% Australia
Ho Chi Minh City 6.20% 9.10% 9.00% 11.50% 6.50% 11.00% 9.40% 3.35% Vietnam
Hong Kong 2.85% 3.80% 2.85% 4.50% 2.85% 3.85% 3.14% 1.70% Hong Kong
Jakarta 5.00% 6.00% 7.00% 8.00% 8.00% 10.00% 7.90% 4.97% Indonesia
Manila 5.00% 6.00% 7.00% 8.00% 8.00% 10.00% 6.25% 8.60% Philippines
Melbourne 4.75% 5.25% 4.75% 6.50% 4.00% 5.00% 3.60% 6.80% Australia
Mumbai 6.75% 8.50% 7.50% 8.75% 8.00% 9.50% 10.00% 6.44% India
Perth 5.25% 6.50% 5.00% 6.50% 5.00% 6.00% 3.60% 6.80% Australia
Seoul 3.50% 4.50% 5.50% 6.50% 5.00% 6.00% 5.32% 4.20% Korea
Shanghai 5.00% 6.00% 5.50% 6.50% 4.75% 5.75% 4.30% 0.70% China
Singapore 3.00% 3.50% 4.25% 4.75% 5.25% 6.25% 4.50% 6.05% Singapore
Sydney 4.50% 5.00% 4.75% 6.50% 4.00% 5.00% 3.60% 6.80% Australia
Taipei 2.40% 2.80% 2.40% 3.10% 2.60% 3.10% 2.97% 2.35% Taiwan
Tokyo 2.80% 3.90% 2.80% 4.50% 3.50% 4.50% 0.07% 3.30% Japan
Explanatory notes
The information contained in this report has been from sources
deemed reliable. While every reasonable effort has been made to
ensure its accuracy, we cannot guarantee it. No responsibility is
assumed for any inaccuracies. Readers are encouraged to consult
their professional advisors prior to acting on any of the material
contained in this report.

Industrial sector includes warehouse and logistics.

China interest rate is based on 5-year Loan Prime Rate (LPR).

India interest rate is based on average lending rate.

Manila industrial cap rate is based on land lease cap rate for
industrial estates just outside Metro Manila, i.e. Batangas, Cavite
and Laguna areas.

Taipei industrial sector cap rate refers to industrial-offices buildings

in the Taipei, which also include factory, warehouse and logistics in
these buildings.
 Colliers 7

Appendix
Interest rate Inflation rate
Market
Source Local terminology Source Local terminology
Australia Reserve Bank of Australia | Apr 2023 Interest Rate Australian Bureau of Statistics | Feb 2023 Inflation Rate
China The People's Bank of China | Mar 2023 Loan Prime Rate National Bureau of Statistics | Mar 2023 Inflation Rate
(LPR)
Hong Kong Hong Kong Monetary Authority | Mar 2023 HIBOR Census and Statistics Department | Feb 2023 Inflation Rate
India State Bank of India | Apr 2023 Lending Rate Ministry of Statistics and Programme Inflation Rate
Implementation, Government of India | Feb 2023
Indonesia Central Bank of Indonesia | Mar 2023 Lending Rate Indonesia Statistical Agency | Mar 2023 Inflation Rate
Japan JBA TIBOR Administration | Mar 2023 TIBOR Statistics Bureau of Japan | Feb 2023 CPI
Korea Bank of Korea | Feb 2023 Lending Rate Statistics Korea | Mar 2023 Core Consumer
Prices
New Reserve Bank of New Zealand | Apr 2023 Official Cash Rate Statistics New Zealand | Mar 2023 CPI
Zealand (OCR)
Philippines Bangko Sentral ng Pilipinas | Mar 2023 Interest Rate Philippine Statistics Authority | Feb 2023 Inflation Rate
Singapore Monetary Authority of Singapore | Apr 2023 Interest Rate Oxford Economics | Apr 2023 Inflation Rate
Taiwan Central Bank of the R.O.C. (Taiwan) | Mar 2023 Lending Rate Directorate-General of Budget, Accounting and Inflation Rate
Statistics, Executive Yuan, Taiwan | Mar 2023
Thailand Bank of Thailand | Mar 2023 Interest Rate Ministry of Commerce | Mar 2023 Inflation Rate
Vietnam The State Bank of Vietnam | Q1 2023 Lending Rate Trading Economics | Mar 2023 Inflation Rate
For further information, please contact:

CK Lau Dwight Hillier Kane Sweetman

Managing Director | Asia Managing Director | Australia National Director | New Zealand
Valuation & Advisory Services Valuation & Advisory Services, Strategic Valuation & Advisory Services
Managing Director | Hong Kong Advisory & Healthcare & Retirement Living +64 9 356 8904
+852 2822 0665 +61 2 9257 0219 kane.sweetman@colliers.com
ck.lau@colliers.com dwight.hillier@colliers.com

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