Commercial property transaction volume hit $794.04b in Q4

A series of mega-value transactions boosted this quarter’s figures as 14 deals were valued over $1b.

Commercial real estate transaction volume hit a record-high $794.04b (US$101.6b) in Q4 which marks the highest quarterly transaction volume of the year, according to CBRE.

This reflects 329% QoQ increase as transaction (with the exclusion of the two largest deals) totaled $63.2b, bringing the full year total to a whopping $181.6b. 

CBRE notes that this period witnessed a high number of mega-value transactions, which accounted for approximately 87% of total transaction volume, with fourteen deals valued over $1b. 

The average for such large offerings fell only at four per quarter.

Offices accounted for more than half of total transaction volume in Q4 with the sale of 75% stake in The Center for a whopping $40.2b as the largest transaction for the quarter.

The sale set a global new record for a single building transaction with $32,951 per square feet. 

Robust demand for neighborhood malls propped up retail property transaction volume to $32.7b. Notable transactions include a consortium formed by Gaw Capital Partners, Great Wall Pan Asia and Goldman Sachs to acquire 17 neighborhood malls under Link REIT for $23b and the sale of Provident Square to Chelsfield and Pamfleet for $2b.

Further growth in inbound tourism also spurred business confidence towards the hotel sector in Q4. Notable transactions include the Rosedale Hotel in Causeway Bay for $1.65b. 

For its outlook, CBRE expects growing investor demand in grade B office premises for co-working and co-living use but grade A office capital value growth is projected to slow down amidst a higher base of comparison. 

Business sentiment, however, is projected to remain muted in the retail sector as investor focus shifts from tier I high street shops to neighborhood retail assets supported by stable domestic spending. Retail capital values are also forecasted to hit bottom in 2018. 

“Chinese investors are expected to remain active in 2018, especially for Grade A offices. CBRE Research expects to see more transactions involving Chinese investors forming joint ventures with experienced offshore partners, a strategy first utilised in the residential market several years ago but which has now expanded to the commercial sector,” CBRE said in its report.