Cap rates in the Pacific region will reach a new low, reflecting recent interest rate cuts, reports CBRE. The indicative cap rate range for the Pacific tightened by 25 basis points to 50 basis points in the second quarter 2019.
Other findings in the Cap Rate Survey for second quarter 2019 include:
Cap rates in Asia will hold firm but Shanghai and Shenzhen will experience higher yield expansion pressure due to greater leasing risk.
Lending will remain stable. However, there will be short-term movement in the interest rate spread charged on top of the reference rate for commercial property lending in the Pacific.
Investors are more cautious amid the uncertain economic outlook. CBRE Research retains its forecast of a 5 percent to 10 percent decline in total investment turnover in 2019. This aligns with the majority view of a decline in buying activity in the second half 2019.
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