Asia Real Estate Market Update August 2021


Hong Kong Office

Investment activity subdued – Christie’s has preleased four floors totalling 50,000 sq ft at Henderson Land’s new office development The Henderson in Central as its APAC headquarters, relocating from Alexandra House. The 465,000 sq ft building is due for completion in 2023. The auction house will reportedly use about 30,000 sq ft of the premises for galleries and salesrooms. The effective rent is approximately HK$120 per sq ft.

Investment activity was subdued in July, partly attributed to fluctuating performance of the stock market. According to Midland Commercial, only eight transactions were recorded among a selected basket of 50 Grade A offices, down 60% m-o-m. Among the more notable transactions, Wang On Group sold a whole floor at United Centre in Admiralty for HK$515 million (HK$ 25,135 per sq ft / 2.7% initial yield) to a local investor.

Hong Kong Retail

Improved vacancy of prime street shops – Retail sales climbed for the fifth consecutive month, up 6% y-o-y in June, amid accelerated vaccination progress and absence of COVID in HK. Retail sales rose 8% y-o-y in the first half of 2021, with the rollout of a HK$36 billion digital voucher scheme acting as a solid support for consumer spending in the coming months.

According to Centaline, street shops vacancies across the five core areas eased in the year-to-date, as lower rents prompted tenants to lock in leases. Vacancy rates in Causeway Bay, Tsimshatsui and Mongkok stood at 10%, 15% and 12%, respectively, in July.

In the investment market, Dairy Farm sold seven ground floor shops totalling 6,370 sq ft at Po Kai Mansion in Kwai Chung for HK$46 million (averaging HK$7,143 per sq ft / 2.9% initial yield). The same seller is also reportedly selling four other self-occupied retail units in Mongkok, Kwai Chung, Mid-levels and Cheung Sha Wan, with an asking price of HK$400 million.

Hong Kong Residential

New home sales slowed – Wheelock Properties won the land sale tender for a residential site in Kwu Tung for HK4.19 billion, outbidding 11 other property developers. The record-breaking A.V. of HK$8,499 per sq ft was 7% higher than market estimates and 18% higher than the amount Sun Hung Kai Properties paid for an adjacent plot four months earlier.

In anticipation of multiple large-scale new launches in August, primary home sales in July fell 33% m-o-m to 1,250. China Overseas’ One Victoria project in Kai Tak sold 500 units during the month, generating HK$5.7 billion.

The CCL Index, which tracks secondary residential prices in the city, increased by 3.4% m-o-m in July, to reach an historical high.


Singapore Office

Flight to CBD quality – The Urban Redevelopment Authority’s data shows that the median rental for Category 1 office buildings (i.e. good qualify offices in Downtown Core and Orchard Planning Area) rose 1.1% q-o-q in 2Q2021, whereas it fell 1.0% for Category 2 (all other office space). This is due to increased leasing activity in prime office buildings in the CBD by smaller occupiers such as boutique investment companies and tech firms.

Islandwide net demand for office space (i.e. change in occupied space) decreased 247,570 sq ft in 2Q, following a 204,514 sq ft contraction in 1Q. The Downtown Core vacancy rate climbed for the third consecutive quarter to 12.8% at the end of 2Q. Occupier demand may improve as Singapore is now embarking on the four-steps of reopening announced by the government. From 19th August, up to 50% of work-from-home employees will be allowed to return to their workplace.

Singapore Retail

Slow recovery – Although June retail sales of S$3.3 billion were still below pre-COVID June 2019 levels of S$3.5 billion, sentiment has noticeably improved especially for large-ticket and discretionary items. June’s online retail sales of 15.4% increased by three fold comparing to 5.3% in June 2019. The higher online sales proportion is due to online promotional events such as the Great Singapore Sale and increasing popularity of online shopping. June’s F&B sales of S$529 million were sharply lower than the S$864 million recorded in June 2019, largely due to the introduction of stricter social distancing measures.

Singapore Residential

Upward repricing in new launches – Strong buying activity has prompted developers to raise prices for new projects by 1% to 4%, especially for those located outside the Core Central Region.

Pasir Ris 8, an east-side condominium, sold 85% of its units over the launch weekend, with the developer increasing prices six times in one day. Record bids were lodged at two residential sites (Lentor Central and Tampines EC site) under the Government Land Sales programme. Developers are looking to replenish land banks as unsold private housing inventory is nearing a 4-year low of 16,929 units. Home buyers may also be put off from the high resale prices of public housing (i.e. HDB flats), which rose for 13 straight months in July.


Shanghai Office

Hike in net absorption – The first half of 2021 saw a hike in demand and supply, pushing net absorption (5.88 billion sqm in 1H2021) to 67% above its 10-year average. Most take-up was in the emerging business districts of New Bund, Xuhui Waterfront and Wujiaochang.

In the co-working submarket, an increasing number of operators is targeting tenants’ needs for fully furnished offices. Although average asking rents remain steady, the rent free and construction period terms have been gradually increasing, expanding the face rent premium over effective rent to 25%, according to CBRE. In the next phase of development, co-working platforms are expected to move from their current scale-oriented strategies to compete over operating efficiencies in a profitability drive.

On the investment front, Domestic HR service provider 51 job (Nasdaq: JOBS) acquired a 32,400 sqm office block from Tishman in Crystal Plaza, New Bund, as its new headquarters, for RMB 2.07bn (RMB 63,888 per sqm).

Shanghai Retail

Buoyant prime retail – Demand for prime units remained buoyant in Q2 as retailers from various sectors continue to expand. The overall vacancy rate edged down 0.12% q-o-q to 9.25%, and average asking rent grew 1.4% to RMB 1,976 per sqm per month. Trade mix adjustments and tenant upgrading activities in mid-to high-end mature projects were key drivers of absorption; with luxury, F&B, lifestyle, and auto experience stores leading demand.

In the investment market, Swire Properties will collaborate with Jing’an Real Estate Group in the revitalization of Zhangyuan’s 43 shikumen blocks of around 170 historic buildings in the core area of West Nanjing Road. The four land parcels that Zhangyuan sits on are owned by Shanghai Jing’an Urban Renewal Construction Development Company, a subsidiary of government owned Jing’an Real Estate Group. With 62,498 sqm above-ground GFA, the project will provide 40,339 sqm of retail, 8,840 sqm low-density residential, 5,322 sqm offices, 3,315 sqm cultural venues, and 3,315 sqm of public facilities. Additionally, 70,000 sqm of underground space will connect to three Metro lines (2, 12 and 13), promising to add more retail area for this mega project.

Shanghai Industrial

Outstanding recovery from pandemic – The accumulated business park office net absorption in the first half of the year reached 80% of that of last year, with the most active sectors being healthcare, technology, and financial. Citywide average rent for business park offices remained stable at RMB 4.40/sqm/day, while the vacancy rate dropped to 14% at the end of 2Q. The highest rents were achieved in Lujiazui Software Park, Zhangjiang Hi-tech Park and Caohejing Hi-tech Park.

With accelerating demand for online data, investors were active in the data center market. Capitaland purchased a 75,000 sqm data center campus in Minhang from AVIC Trust, an investment arm of China’s leading aircraft maker, for RMB 3.66 billion (RMB 48,800/sqm). The property is an established asset that comprises four buildings hosting two of China’s largest telecommunications companies.

Shanghai Residential

Strengthening housing policies – The PBOC ordered lenders in Shanghai to raise the rate of mortgage loans for first-time homebuyers to 5% from 4.65%, with second home raised to 5.7% from 5.25%. Another new policy regulates that apart from home buyers, the recipients of housing donation shall also comply with the national and municipal housing purchase restriction policies. And within a five-year period from the transfer registration date, the donated asset still counts for housing unit quota of the donor.

A rental-only community is to be built in Zhangjiang Science City, aiming at mid-to-high-end housing needs of white-collar workers. Around 4,000 units with a total GFA of 200,000 sqm will be constructed in three phases, to help serve the 18,000 enterprises and 370,000 people in the business park.


About Schroders Capital

Schroders Capital is the private markets investment division of Schroders, the global asset manager. It offers investors a local approach to investing across a diversified range of private asset strategies, supported by a global perspective and the long-established Schroders business.

Part of Schroders Capital is the real estate capability in Asia Pacific which is an experienced real estate investment advisor with offices in Hong Kong, Singapore and Shanghai. Please visit our website here to learn more.


Please contact Cristine Lai at or visit our website here.


Contributes to
Unstructured Learning Time

CPD Accredited


  • Asia Pacific
  • Real Estate
  • Market reviews