This live webinar will begin shortly A S I A P A C I F I C C A P I T A L M A R K E T S O V E R V I E W SPOTLIGHT ON AUSTRALIA 2 0 2 1 Q 1
AGENDA 1. INTRODUCTIONS 4. Q & A James Shepherd Head of Business Development Services Greater China james.shepherd@cushwake.com 2. ASIA PACIFIC MARKET OVERVIEW Josh Cullen International Director Head of Capital Markets - Australia & New Zealand josh.cullen@cushwake.com Catherine Chen Head of Capital Markets Research Greater China catherine.chen@cushwake.com Dennis Yeo Head, Investor Services Asia Pacific dennis.yeo@cushwake.com 3. AUSTRALIA MARKET OVERVIEW John Sears Head of Research Australia & New Zealand john.sears@cushwake.com Gordon Marsden Regional Director Asia Pacific Capital Markets gordon.marsden@cushwake.com 2021 Asia Pacific Capital Markets Overview 1
ASIA PACIFIC IN RECOVERY AND EXPANSION Moody s Global Business Cycle Status (March 2021) Expansion: Mainland China Vietnam Taiwan Recovery: Australia Hong Kong SAR India Japan Singapore South Korea Expansion At risk Recovery Recession Source: Moody s Analytics 2021 Asia Pacific Capital Markets Overview 2
GDP GROW TH OUTLOOK Strong growth in India and Philippines in the next decade GDP GROWTH, Y/Y % 10 8 6 5.3 5.0 4.9 4.8 6.5 7.4 4 2 1.9 1.7 2.4 2.9 1.2 2.5 2.2 2.8 0 (2) (4) (6) (8) (10) (12) Taiwan Vietnam China South Korea New Zealand Indonesia Australia Japan Singapore Malaysia Hong Kong SAR Thailand India Philippines 2010-2019 Average GDP Growth 2020 GDP Growth 2021-2030 Average GDP Growth Source: Moody s Analytics, updated on Feb 4 th, 2020 2021 Asia Pacific Capital Markets Overview 3
TRANSACTION VOLUME BY MARKET Q1 2021 US$ bn 200 180 ASIA PACIFIC TRANSACTION VOLUME (EXCLUDING LAND) Tokyo Seoul TOTAL TRANSACTION VOLUME (EXCLUDING LAND) 160 Hong Kong 140 Sydney 120 Shenzhen 100 Singapore 80 60 40 20 0 2016 2017 2018 2019 2020 Q1 2021 Beijing Shanghai Osaka Guangzhou 0 2 4 6 8 Japan Mainland China South Korea Australia Hong Kong SAR India Transaction Volume (US$ bn) Taiwan Singapore Others US$ bn 2021 Q1 2020 Q1 Source: Real Capital Analytics, as of on May 6th, 2021 2021 Asia Pacific Capital Markets Overview 4
CROSS-BORDER TRANSACTIONS Increasing proportion of investors based outside APAC WITHIN VS. OUTSIDE APAC TOP SOURCES OF CROSS BORDER CAPITAL TOP TARGETS OF CROSS BORDER CAPITAL 100% 90% United States Japan 80% 70% 40% 49% 47% 57% 56% Canada Australia 60% Singapore China 50% 40% Hong Kong SAR India 30% 20% 60% 51% 53% 43% 44% Germany Singapore 10% 0% 2017 2018 2019 2020 Q1 2021 0 2 4 Transaction Volume (US$ bn) 0 1 2 3 Transaction Volume (US$ bn) Within Asia Pacific Outside Asia Pacific 2021 Q1 2020 Q1 2021 Q1 2020 Q1 Source: Real Capital Analytics, as of on April 28th, 2021 2021 Asia Pacific Capital Markets Overview 5
ACTIVE NORTH AMERICAN AND EUROPEAN INVESTORS Cross-border capital flows (last 12 months*) Japan: 8.9b USD +42% North America Europe Australia: 3.8b USD +312% Singapore: 4.1b USD +31% India: 4.1b USD +31% *refers to 12 months ending March 2021, y-o-y growth rate. Source: Real Capital Analytics Feb 9 th, 2021 Based on deals over 100 million USD, excluding land or development sites. 2021 Asia Pacific Capital Markets Overview 6
MOST LIQUID MARKETS IN ASIA PACIFIC Increasing investment in industrial and retail asset Hotel 5% Apartment 4% Seniors Housing 0.2% OFFICE RETAIL Retail 21% 2021 Q1 Office 45% Billion USD Japan 0 2 4-49% Billion USD 0 1 2 China +2% Industrial 25% China -24% South Korea -41% Australia +57% Australia +139% Apartment 15% Seniors Housing 0.1% LOGISTICS MULTIFAMILY Hotel 6% Retail 16% Industrial 19% 2020 Q1 Office 44% Billion USD Japan South Korea Australia 0 1 2 +4% +52% +41% Billion USD 0 0.5 1 1.5 Japan -42% Singapore x3.9 times Source: Real Capital Analytics on May 6th, 2021 2021 Asia Pacific Capital Markets Overview 7
STRONG PREFERENCE FOR CORE AND INDUSTRIAL ASSET ANREV Capital Raising Survey 2021 Expectations for capital raising activity over the next two years (Global) Capital raised for APAC non-listed real estate funds by country strategy 100% 80% 60% 40% 20% 0% 18 21 18 15 22 20 8 6 10 9 3 7 73 70 69 72 69 76 2015 2016 2017 2018 2019 2020 37% 63% 29 3 31 Japan China Australia Increase Decrease No Change Undecided Single country Multi-country Capital raised for APAC non-listed vehicles by investment style Capital raised for APAC non-listed real estate funds by sector strategy 14% Core 8 Healthcare 15% 41% Value added Opportunity Mixed strategies 40% 60% 50 Residential Office 30% Industrial Single sector Multi-sector 2021 Asia Pacific Capital Markets Overview 8
AUSTRALIAN CRE MARKET OVERVIEW 2 0 2 1 M AY
AUSTRALIAN ECONOMIC GROW TH Growth is bouncing in the short term, real GDP annual growth forecasts GDP GROWTH, Y/Y % 5 4 3 2 1 0-1 -2-3 2019 2020 2021 2022 2023 2024 2025 Source: Deloitte Access Economics; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 10
SENTIMENT REBOUNDS Business conditions and consumer sentiment 30 20 Business conditions Business conditions, record high Consumer sentiment, 10 year high 140 130 10 120 0 110 100-10 90-20 Consumer sentiment 80-30 70-40 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 60 Business conditions (lhs) Consumer sentiment (rhs) Source: Westpac-Melbourne Institute; NAB; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 11
ECONOMIC GROW TH OUTLOOK T he long-term outlook is also solid, Annual average real growth India China, People s Republic of Australia United States Canada Singapore New Zealand United Kingdom Euro Zone Korea (Republic of) (South) Japan 0% 1% 2% 3% 4% 5% 6% 7% 2021-2050 2021-2040 2021-2030 Source: Moody s Analytics; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 12
A$ millions CRE TRANSACTION VOLUMES Total real estate purchasing activity $50,000 $45.5bn $45,000 $40,000 $35,000 $30,000 $25.8bn $25,000 $20,000 $15,000 $10,000 $5,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021YTD New South Wales Victoria Queensland Western Australia Other Australia Wide Source: Deloitte Access Economics; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 13
CRE TRANSACTION VOLUMES Total real estate purchasing activity Other 18% Other 17% Industrial 9% Office 59% Industrial 23% Office 41% Retail 14% Retail 19% Q1 2021 Annual Volume Source: RCA; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 14
A$ millions CRE TRANSACTION VOLUMES Quarterly investment volumes $18,000 60% $16,000 $14,000 $12,000 50% 40% $10,000 $8,000 $6,000 30% 20% $4,000 $2,000 10% $0 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 0% Domestic (LHS) Foreign (LHS) Rolling Annual Foreign Investment (RHS) Source: RCA; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 15
COMMERCIAL PROPERTY INCOME RETURN TREND Office, retail & industrial income returns and 10 year government bond yields 12% 10% 8% 6% 4% 2% 0% 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Office Retail Industrial 10 Year Govt Bond Yield Source: MSCI/IPD: RBA; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 16
GLOBAL YIELDS Prime Office Cap Rates (%) 12% Max* Min* 20Q4 (current) 19Q4 (*max/min refer to 2007-2020 Q4) 10% 8% 6% 4% 2% 0% Europe APAC/China Americas Max* Min* 20Q4 (current) 19Q4 Source: MSCI/IPD: RBA; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 17
CBD OFFICE VACANCY Vacancy moved higher in 2020, vacancy range since 1990 35% 30% 25% 20% 15% 10% 5% 0% Sydney Melbourne Brisbane Adelaide Perth Canberra Min Max Current Average Source: PCA; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 18
CBD OFFICE MARKET SUMMARY Office markets have softened over 2020 Sydney -113,346 sqm 12m Net Absorption 8.6% Vacancy $910 sqm Gross Effective Rent 33% Gross Incentive Melbourne 22,397 sqm 12m Net Absorption 8.2% Vacancy $395 Net Effective Rent 39% Net Incentive Brisbane -9,807 sqm 12m Net Absorption 13.6% Vacancy $445 sqm Gross Effective Rent 41% Gross Incentive Perth -45,098 sqm 12m Net Absorption 20.0% Vacancy ~$300 sqm Net Effective Rent ~50% Net Incentive Source: PCA; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 19
RETAIL TURNOVER GROW TH Moving annual turnover growth rate 14% High CPI & stock bubble 12% Housing boom Housing/credit boom 10% 8% Tech boom & wreck Fiscal stimulus SE Aust. Housing boom COVID-19 6% 4% 2% Recessions Asian crisis Petrol spikes & Int rate hikes GFC Euro crisis & carbon tax Slowing income growth 0% 1985 1989 1993 1997 2001 2005 2009 2013 2017 2021 Source: ABS; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 20
ONLINE SALES Online sales as a percentage of total sales Increase during pandemic, 3.5 Online share Feb 2020, 9.4 87.1 Source: NAB; ABS; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 21
A$ millions RETAIL TRANSACTION VOLUMES Annual investment volumes $10,000 $8,000 $6,000 $4,000 $2,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021YTD New South Wales Victoria Queensland Western Australia Other Australia Wide Source: RCA; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 22
1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018 Percent of total retail trade Q1 2021 Transaction volume by market 1. DECLINE OF MANUFACTURING 2. RISE OF E-COMMERCE & TECHNOLOGY MANUFACTURING SHARE OF ECONOMIC OUTPUT 17% 15% 13% 11% 9% 7% 5% 14% 12% 10% 8% 6% 2016 2017 2018 2019 2020 2021 3. SUBURBAN INFILL: E.G. SOUTH SYDNEY: 2009 TO 2019 INDUSTRIAL TO APARTMENTS Source: ABS; NAB; Nearmap; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 23
A$ millions INDUSTRIAL TRANSACTION VOLUMES Annual investment volumes $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021YTD New South Wales Victoria Queensland Western Australia Other Australia Wide Source: RCA; Cushman & Wakefield 2021 Asia Pacific Capital Markets Overview 24
SUMMARY 01 Economy bouncing strongly, COVID risks 02 Investment supported by economy and low interest rates 03 Office suffered in 2020, resetting in 2021 04 Retail adapting to structural change 05 Industrial structural tailwinds, strong demand 2021 Asia Pacific Capital Markets Overview 25
MODERATOR: Catherine Chen Director, Research Greater China catherine.chen@cushwake.com PANELISTS: Josh Cullen International Director Head of Capital Markets - Australia & New Zealand josh.cullen@cushwake.com Dennis Yeo Head, Investor Services Asia Pacific dennis.yeo@cushwake.com Gordon Marsden Regional Director Asia Pacific Capital Markets gordon.marsden@cushwake.com Q&A Please click on the Q&A icon on the top right hand corner of your window to submit your questions. 2021 Asia Pacific Capital Markets Overview 26
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