logo redirect pin user minus plus fax mobile-phone office-phone data envelope globe outlook retail close line-arrow-down solid-triangle-down facebook globe2 google hamburger line-arrow-left solid-triangle-left linkedin wechat play-btn line-arrow-right arrow-right solid-triangle-right search twitter line-arrow-up solid-triangle-up calendar globe-americas globe-apac globe-emea external-link music picture paper pictures play gallery download rss-feed vcard account-loading
Our website uses cookies and other technologies so that we can remember you and understand how you and other visitors use our website. By continuing to browse this Site, you are agreeing to our use of cookies. Click here for more information on our Cookie Policy, including how you may control the information we collect about you through cookies. Read More Accept
Mainland China
  • Global
  • United States
  • Angola
  • Argentina
  • Australia
  • Austria
  • Bahrain
  • Baltics
  • Belgium
  • Brazil
  • Cambodia
  • Canada
  • Chile
  • Colombia
  • Czech Republic
  • Denmark
  • Egypt
  • Finland
  • France
  • Germany
  • Greece
  • Hong Kong
  • Hungary
  • India
  • Indonesia
  • Ireland
  • Israel
  • Italy
  • Japan
  • Kazakhstan
  • Kenya
  • Korea
  • Latin America
  • Luxembourg
  • Mainland China
  • Malaysia
  • Mexico
  • Morocco
  • Netherlands
  • New Zealand
  • Nigeria
  • Norway
  • Oman
  • Pakistan
  • Panama
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Romania
  • Russia
  • Saudi Arabia
  • Singapore
  • Slovakia
  • South Eastern Europe
  • Spain
  • Sweden
  • Switzerland
  • Taiwan
  • Thailand
  • Turkey
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • Venezuela
  • Vietnam
Log In
  • Global Intranet
  • myCBRE
  • Services
    • Business Line
      • Advisory & Transaction Services
      • Capital Markets
      • Global Workplace Solutions
      • Investment Management (CBRE Global Investors)
      • Property Management
      • Valuation & Advisory Services
    • Industries & Specialties
      • Office
      • Industrial & Logistics
      • Retail
      • Residential
      • Urban Development
    • Services for Investors
      • Consulting
      • Host
      • International Residential Projects
      • Investment Accounting & Reporting Solutions
      • Leasing & Advisory
      • Valuation & Advisory
    • Services for Occupiers
      • Enterprise Facilities Management
      • Host
      • Leasing & Advisory
      • Occupier Consulting
      • Portfolio Services
      • Project Management
      • Valuation & Advisory
      • Workplace
  • Research & Reports
    • About Research
      China Research Archives
      Asia Pacific Research
      Global Research Gateway
      Global Research Gateway Support
  • People & Offices
    • Executive Team China
  • About CBRE
    • Case Studies
      Coporate Information
      Corporate Responsibility
      Media Center
      Asia Media Centre
      Investor Relations
      Careers

Previous

CBRE Releases Global Prime Office Occupancy Costs Survey

Next

Hong Kong and Beijing Listed in World's Top10 Most Expensive Retail Markets
  • About CBRE
  • Media Centre
  • Fed Tapering News Gives More Clarity to Real Estate Investment

Fed Tapering News Gives More Clarity to Real Estate Investment

January 2, 2014
  • Email
  • Share
  • Tweet
  • Share
  • Share

Limited Direct Impact on China Property Market

January 2nd, 2014, Beijing —The U.S. Federal Reserve’s announcement that it will cut monthly purchases of mortgage-backed and treasury securities—to $75 billion from $85 billion, starting in January 2014—is likely to have positive implications for the Asia real estate market. Since the Federal Reserve’s summer announcement that it might begin tapering at some point in 2013, the market has been struck with uncertainty around when and how fast tapering might come, making business decisions difficult. However, Wednesday’s announcement can be perceived as business friendly, as it clarifies that rate and extent of tapering will both be moderate.

The benefits of the Fed’s announcement will be as follows:

• Provides more clarity around the Fed’s policy stance

• Highlights better economic prospects in US in 2014

• Frees up corporate decision-makers to implement plans for the coming year

CBRE maintains its view that the Asia Pacific region be the primary focus for global corporate expansion due to comparatively robust fundamentals of steady urbanization, rising wealth and favorable demographics. The impact on the China property market should be minimal given China’s current capital control policy and the fact that China property market is predominantly driven by domestic investors.

Asia Pacific

Overall, the clarity around the Fed’s announcement will allow firms to make business decisions that may have been on hold for the past few months. CBRE expects this to play out particularly in Asia in 2014 and eventually provide support to the rental market as firms seek to grow. There will be around a six to 12 months lag time before we see the impact on rentals from the improvement in business sentiment.

For capital markets, since bond yields have reacted mildly to tapering plans and the Fed expects to keep the Fed funds rate at zero for the foreseeable future, global interest rates are expected to stay low and future increases will likely be gradual and cautiously tied to the pace of recovery. Investors will remain keen on yield-accretive investment vehicles, which is positive for commercial real estate. Furthermore, investors will increasingly move up the risk spectrum in search for higher returns and shift their focus to secondary assets and non-gateway cities as yields on core assets in many parts of the world have compressed significantly.

Over the longer term the expectation is that U.S. interest rates rise will normalize, and this could exert upward pressure on interest rates for markets like Hong Kong and Singapore which rely heavily on foreign trade and have no capital flow restrictions—ultimately pushing up yield and return expectations on real estate investments. Property valuations in Asia could potentially be impacted by rising cap rates, but if improving fundamentals feed through into rising rents, this will partly offset the impact on property prices.

However, given the likely extension of the Fed’s zero rate, in Asia it appears that excess liquidity will continue to be the dominating factor in determining asset prices, at least in the coming 12 months. Property yields are therefore likely to remain low over this timeframe.

 

China

 “The Fed tapering was well flagged to the market back in mid 2013. This should not be a surprise to the market,” said Frank Chen, Executive Director, Head of CBRE Research, China, “Furthermore, the magnitude of the tapering was milder than market expectation. Given China’s  strict capital control policy and the fact that China property market is predominantly driven by domestic investors, CBRE believe the immediate impact on China’s property market should be minimal.”

“The tapering signaled the Fed’s confidence in the underlying strength of the US economy and a better economic prospect for 2014. Over the long term, the improving external environment bodes well for the China export sector, which will support domestic GDP growth. A stronger economic growth will in turn lead to stronger office demand and investment demand,” Frank added.

 

 

 

​

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.​

​​

Media Contacts

Jamie-Feng_326x248
Jamie Feng
Assistant Manager
China
Marketing & Communications
+86 21 2401 1272
+86 139 1785 0201
  • Corporate Information
  • Corporate Responsibility
  • Case Studies
  • Media Centre
  • About Us
  • Careers
  • People & Offices
  • Executive Team
  • Investor Relations
  • Contact Us
  • Global Web Privacy and Cookie Policy
  • Sitemap
  • Disclaimer
  • Terms of Use
  • Instagram
  • Twitter
  • Wechat
  • Weibo
  • Youtube
  • Facebook
  • Google
  • LinkedIn