Asia real estate market snapshot June 2022




US 10-year bond yield

(29 June 2022)


Investment property volumes

(Jan-May 2022)


Exchange rate
(29 June)


Grade A office rent growth

(Q1 2022)


(+2.7pp from 0.5% on
3 Aug, 2020)

USD62.6 billion

(-15% y-o-y)1


(yen’s weakest level since 1998)

7% y-o-y2
(strongest in APAC)

1Source: MSCI Real Capital Analytics database (28 June, 2022). Subject to revision

2Source: JLL, Asia Pacific Office Digest Q1 2022

Hong Kong SAR

Interest rates rise further; medical real estate market expands; major new office leasing deal in Island East

·         On 16 June, the Hong Kong Monetary Authority raised the city’s benchmark interest rate by 75 basis points to 2.00% following the 75 basis point interest rate hike by the US Federal Reserve the previous day3. While banks have kept best lending rates unchanged, both one-month (the key reference for the mortgage rate) and three-month HIBOR rates have climbed to the highest level since 2020, signalling an increasing cost of borrowing and tightening liquidity.

·         The emerging medical real estate market segment continues to attract interest. The local medical group EC Healthcare has established a joint venture with KaiLong Group and a local construction company to develop a purpose-built medical building in Tsim Sha Tsui. The development is due to be completed by Q4 2024 and to provide 103,000 sq ft of lettable area4. EC Healthcare has reportedly agreed to lease the entire building for five years at HKD97 million annually (i.e., HKD78 per sq foot per month), with a five-year extension option5.

·         China CITIC Bank has pre-leased six and a half floors totalling 150,000 sq feet at Two Taikoo Place, Swire Properties’ newest office development in Quarry Bay in Hong Kong’s Island East district. The bank is relocating to the building from the adjacent Devon House for a reported monthly rent of HKD50 per sq foot, following Julius Baer’s leasing commitment of 92,000 sq feet in April last year. The asking rent of Two Taikoo Place ranges between HKD42 and HKD50 per sq foot, which is lower than the HKD50-HKD70 per sq ft range of One Taikoo Place launched in 20186.

·         Retail sales in Hong Kong rose 11.7% y-o-y in April following two months of contraction, reflecting a more stable pandemic situation and the rollout of a new round of consumption vouchers. With the second batch of HKD5,000 consumption vouchers to be distributed in the coming months, retail market sentiment should continue to improve7.







Office rent growth highest in APAC; residential market heats up even further

·         Investment-grade office rent growth in Singapore reached about 7% y-o-y in Q1 2022. This was the highest level among major Asia Pacific cities8. With rents still well below the peak level of 2008, there is scope for rents to rise further. Schroders Capital broadly agrees with a broker’s forecast earlier this year that prime rents will rise 6%-7% in 2022 and keep rising to 20249.

·         Overall demand for residential space remains strong despite property cooling measures that were introduced in December 2021. According to data released by the Urban Redevelopment Authority, sales of new private homes by developers more than doubled in May to 1,356 units, from 660 units in April. This was also the highest sales figure since November 2021 (1,547 units)10.

·         Prices of resale private condominiums rose for the 22nd straight month in May 2022, and were up 8% from May 2021. May’s resale volume of 1,572 units was 2% higher than the April total (coincidentally, also 1,547 units)11.

·         With the return of foreign employment due to the further easing of community and border measures in April, rents of private homes are expected to maintain their upward trajectory. According to figures released by SRX Property and for May 2022, condominium rents across Singapore rose 18% from May 2021. This was the 17th consecutive month of growth12.  

8Source: JLL, Asia Pacific Office Digest Q1 2022
9Source: Singapore 2022 Market Outlook report by CBRE (January 2022)





Weak yen makes Japanese property assets attractive to foreigners; Japan reopens to tourists

·         The Japanese yen has continued to weaken, hitting a 24 year low of 136 against the US dollar on 22 June. The yen has also fallen against the Euro and the UK pound, though less sharply. For now, the Bank of Japan remains committed to very low interest rates, and the currency may have to fall even further for the Bank of Japan to change its stance. The yen’s weakness suggests that Japanese property assets currently offer good value for foreign investors managing funds denominated in US dollars or other currencies.

·         After reopening its border to business visitors under a controlled visa scheme, Japan reopened its border to tourists on 10 June. However, there is a daily limit on foreign tourist entry of 20,000, and among other restrictions tourists must be attached to a group led by a certified travel agency13.

·         Given the limited number of tourists permitted and the restrictions they face, in the near term the reopening of the border will not support the hospitality and retail sectors in Japan to the extent that border reopening looks set to support those sectors in Singapore, where entry requirements were relaxed slightly earlier this year. However, in contrast to Singapore, domestic tourists and business travellers are also a very important source of demand for the Japanese hospitality sector. Moreover, there is speculation in the market that Japan will reopen fully to foreign visitors by the end of 202214.


Mainland China

Chinese economy seems to have bottomed; end of lockdown boosts land sales in Shanghai; corporate buyers acquire Shanghai offices; logistics investment remains firm across China

·         China is experiencing an uneven rebound as lockdowns are eased. Retail sales remain weak, falling by 11.1% y-o-y in April and then by 6.7% y-o-y in May. Conversely, exports grew by 3.8% y-o-y in April and then by 16.8% y-o-y in May. Various economic indicators look set to strengthen over June, while real GDP growth looks set to reach about 3.5% for the full year15. This suggests that Q2 2022 may have been the bottom for the Chinese economy. In real estate, office and logistics/industrial leasing activity has been resilient in Beijing and Shanghai so far this year, and if the economy continues to pick up, leasing demand should remain well-supported in H2. Shenzhen and Guangzhou have been less resilient, with the Shenzhen office market affected by oversupply.

·         After two months of strict lockdown, Shanghai lifted restrictions on 1 June. Citizens now require a negative PCR test certificate taken within the last 72 hours to enter office buildings, malls and public transport16. Within five days of the lifting of the lockdown, 36 residential land plots were sold in Shanghai for a total of RMB83.5 billion17. State-owned developers led the sale, taking 30 of the 36 lots, whereas cash-strapped private developers were more cautious about buying new land.

·         Domestic corporate buyers have led recent en-bloc office investment in Shanghai. ERDOS Resources has acquired two office blocks totalling 45,395 sq metres in the Suhe Creek Centre of Shanghai’s Jing’an District for RMB2.67bn (i.e., RMB58,000 per sq metre), together with 210 parking spaces for RMB40 million. The shipping company Zhonggu Logistics has also announced that it will purchase the developer Kaisa’s Shanghai headquarters near Lujiazui, Pudong New District for self-use, at a price of no more than RMB2.9 billion (i.e., RMB 37,662 per sq metre on GFA of 77,658 sq metres). The target asset, Kaisa Financial Centre, is a 16-storey mixed-use office and retail building18.

·         Investment in the Chinese logistics sector remains active. BlackRock will acquire over 90% of a 190,000 sq metre logistics development project in Hebei Province near Beijing with a local operator called Chaintouch China. The project is expected to be completed in 202419. Similarly, Morgan Stanley Real Estate Investing has bought a portfolio of four logistics and industrial assets covering more than 210,000 sq metres in the Yangtze River Delta from SC Capital20.

·         China's first public real estate investment trusts (REITs) based on residential properties will be launched soon, as regulators step up efforts to channel fresh capital into the struggling residential property sector and revive the economy. Stock exchanges in Shanghai and Shenzhen have each accepted an application for residential REITs backed by rental incomes from affordable housing21.


15Source: Schroders, Economic and Strategy Viewpoint (May 2022)

The information in this market update is current as at June 2022 and does not necessarily reflect subsequent market events and conditions. This market briefing is provided for information purposes only and articles do not provide individual financial, legal, tax or investment advice. Past performance is not indicative of future performance. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance. The statements and statistics contained herein are based on material believed to be reliable but are not guaranteed to be accurate or complete. Investments strategies should be evaluated relative to each individual’s objective in consultation with their legal, investment and/or tax advisor. Schroders capital is not liable for any errors or omissions in the information or for any loss or damaged suffered.


Asia Pacific
Real Estate
Contact Schroders Capital
Follow us

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. All investments involve risks including the risk of possible loss of principal.