Office investment yields in Ho Chi Minh City (9.36 percent) and Hanoi (9.00 percent) were world leaders during the second quarter of 2016, however those yields reflected a perception of greater investment risk.
However Sydney offered by far the most attractive returns, according to a list of the world’s gateway office investment destinations developed by Savills and Deakin University.
The Australian city, at 5.62 percent, with LA West, and San Francisco, were the only other gateway cities offering yields above 4.5 percent as returns continued to tumble, according to the report.
The data from the World Office Yield Spectrum research report, published this week, compared 54 markets across Asia, Europe, the United States and Australia.
It confirmed the continued ascendancy of office property as the investment of choice as investors scour global cities for the most attractive office investment yields in the most secure markets.
The report found office investment yields had firmed by an average 32 basis points across the 11 gateway cities since December 2014, with both Munich and Tokyo’s yield falling 55 basis points, Hong Kong 40 basis points and Sydney a whopping 100 basis points.
Singapore, at 4 percent, saw yields soften 15 basis points in response to slower economic conditions.
Of the 54 markets covered, London’s West End, at 2.82 percent, was the only other market to record a sub 3 percent yield – with Hong Kong.
In Hong Kong Savills Senior Director, Research and Consultancy, Simon Smith, said Asian investment markets were mixed over the first half of 2016, with yields firming marginally across most major office markets.
Asian investors continued to display limited appetite for risk outside their home markets.
In contrast Asian outbound capital remained significant while domestic volumes were dictated by local cycles and policy.
He added office investment yields had firmed marginally across most major office markets in the region, with sharper falls registered in Jakarta and Manila.
