Asia’s Global Real Estate Partnerwww.iqiglobal.com

IQI NEWSLETTERWHAT NEXT

MAY

2019

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US economic performance beats the forecast and tops 3.2% in the first quarter. The numbers are bright; however, business confidence remains cautious. The economy still needs more stimulus to remain in growth mode. We expect FED to cut interest rates by September 2019 to provide a boost to the economy. For the moment, the US economy has eschewed recession for the current year.

If you are part of BRI, you are germane to the global economy and financial markets. If not, tough luck to others. If you are invited to the Belt and Road summit, it means you are important to China. China will never leave Malaysia for the next 50-100 years.Strategic geography comes into play for stakeholders to make the maneuvering.

GLOBALECONOMICOUTLOOKQ2 AND Q3 2019: READY FOR EXPANSIONUS Q1, GDP NUMBER IS POSITIVE

BELT AND ROAD SUMMIT - CHINA TAKES THE CENTER STAGE IN THE GLOBAL ECONOMY LIMELIGHT.

BELT AND ROAD EQUATION: WHO IS RELEVANT???

WINNING INFRASTRUCTURE INVESTMENT STRATEGY

If you extrapolate the data from various regions, rate cuts are imminent and prices will stay low. Price inflation is well under control due to weak demand, benign oil prices and slower growth in the global economic recovery. QE-4 is coming back into the market very soon in the USA. Many central banks have sent rate cut signals to the market players including:

Central banks have taken the sole responsibility to deliver economic outcomes, not out of choice but since nobody else wants to take the lead. Central banks in advance economies have borrowed future growth rate by applying various monetary tools including QE for economic expansion. QE has only worked in inflating asset prices through distortion but could not generate economic growth momentum.

GLOBAL INTEREST RATES THEME:RATE CUTS ARE COMING FROM CENTRAL BANKS IN ADVANCED ECONOMIES.

Bank of CanadaReserve Bank of AustraliaReserve Bank of New ZealandECBFEDJCB

We are still buoyant on the energy market outlook.Oil prices to move between $73 and $107 per barrel, in 2019.

The premise for this is simple:

1. Sanctions against Iran on May 22. Venezuela is struggling to boost oil production3. Libya, Nigeria, and Iraq are keeping a slow pace on production output since supplies are not consistent.4. US dollar will stay weaker.

We made the call on the energy market last year in Dubai on October 2, and reported in Gulf Today newspaper on October 5th, 2018: Oil will meander around $73 to $107 per barrel in 2019.

MALAYSIAN RINGITT WILL GET ITS FAIR MARKET VALUE AGAINST US DOLLAR.

Malaysian Ringgit will move in the range of 3.95 to 4.40 / USD in 2019. It will follow the Chinese Yuan and oil movement. The current fair market value of RM stands between 4.08 and 4.20 / USD.

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1. Malaysia2. Sri Lanka3. Pakistan4. Djibouti5. Indonesia

6. Kazakhstan7. Mongolia8. Russia9. Philippines10. Turkey

GAME IS IN THE SOUTH; IMPORTANT PLAYERS IN BRI SOUTHERN CORRIDOR

Sources: China Daily and Star newspaper dated April 27-19.

ENERGY MARKET OUTLOOK 2019OIL TOUCHED $75/BARREL ON APRIL 25, 2019.

Source: CoreLogic, The New Daily, Australian Bureau of Statistics VISIT www.iqiglobal.com FOR MORE INFORMATION

AUSTRALIA

+61 3 8610 6797

Level 3, Collins Street Tower,480 Collins Street,Melbourne Victoria 3000

Australia continues to attract a high level of Chinese investment into Commercial real estate, with total investment reaching AUD3 billion in 2018. We expect to see more Chinese investors venturing beyond Sydney and Melbourne as market conditions improve in the likes of Brisbane, Perth and Adelaide. The overall rental growth remains positive across the countries, with Sydney continuing to lead the way, followed by Melbourne. As the market transitions to rental growth as the key driver of returns, investor attention will increasingly focus on the emerging urban fringes of Sydney and Melbourne where the pace of growth is strongest at present.Overall the rents in Melbourne are more affordable as compared to Sydney. We expect Melbourne to see faster growth in 2019. But the pace will slow as more supply is delivered through 2020 and 2021. Brisbane is now seeing rental growth and we expect this to be sustained; while Perth and Adelaide are likely to see effective growth coming through lower incentives.

OFFICE

The cooling of Sydney and Melbourne markets has led the national home prices to continue to decline. The average median property price in Melbourne now is at $624,425 and Sydney’s at $782,473CoreLogic says Melbourne’s prestigious Inner East has recorded the largest decline in values over the past twelve months.House values dropped slightly in Brisbane, by 0.6 per cent with a median of $489,832. As for Perth, the fall continues with a median of $442,716 compared to the days when it was $500,000Dwelling values remain at a record high across Hobart with a total return of 11.2 per cent with a median of $464,168; and Canberra with a total return of 7.8 per cent, second highest with a median of $595,212.In traditionally affordable Adelaide, the median house price rose by 0.8 per cent over the past year to $426,990.Overall, the housing market's outlook will continue to be affected by “uncertainty related to the federal election, lending policies, and more broadly, domestic economic conditions,” as well as foreign investment, especially from China.

RESIDENTIAL

The outlook for retail is generally weaker than other sectors as it grapples with structural changes such as the shift to online shopping and changes in consumer spending patternsAustralian retailers enjoyed their best sales in February since late 2017. Overall retail sales climbed 0.8 percent, according to figures from the Australian Bureau of Statistics(ABS)But the retail sector will still face intense pressure. Consumer spending has been a major concern as households’ battle high levels of debt, slow pace of wage growth and a falling house price in major cities. Overall, the yields on retail property in Australia remain low.

RETAIL

by MANDY CHENHead of International Sales of IQI

mandy@iqiglobal.com

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In Toronto, it was reported that according to the TREB’s MLS ® System, there were 7,187 residential sales in March 2019. Sales remained relatively flat in Q1 2019 compared to last year. March’s new listings were down by 5.1 per cent year-over-year and Q1 new listings were down by 1.5 per cent.Q1 2019 also saw 6,646 condominium apartment rental transactions through TREB’s MLS ® System. This result was up by 7.7 per cent compared to Q1 2018. Rental transactions were up for bachelor, one-bedroom and two bedroom apartments.The number of condominium rental apartments listed during Q1 2019 was also up on a year-over-year basis by 22.4 per cent.The average Q1 2019 one-bedroom condominium apartment rent for the Greater Toronto Area was $2,143, up 7.4 per cent compared to Q1 2018. The average two-bedroom condominium apartment rent increased by six per cent to $2,811.

RESIDENTIAL

Sources: Toronto Real Estate Board Market Report, CBRE, Retail-Insider

fcell.

CANADA

+(1)905 564 2344+(1)905 564 6744+(1)647 669 9222

fcell.

6705 Tomken road unit 226,Toronto (Mississauga) L5T 2J6

by YOUSAF IQBALDirector of IQI Canada

1 - Refers to the total number of rental units that were available during the reporting period.2 - Refers to firm lease transactions entered in the TorontoMLS system between the first and last day of the reporting period.3 - Refers to the average lease rate for firm lease transactions entered in the TREB MLS® system between the first and last day of the reporting period.

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The Canadian employment market continues to post strong job gains with 122,700 new positions created in the first two months of 2019. The national unemployment rate remains near its record low at 5.8%.The national office vacancy rates went down to 11.5% in Q1 2019. A growing suburban market led activity in the quarter with over 1.4 million sq. ft. of absorption.In Alberta, recovery is ongoing with noted improvements to the amount of sublet space on the market. While overall vacancy has remained stable q-o-q in Edmonton and Calgary, the amount of sublet space on the market decreased by 25.1% and 8.6%, respectively. This indicates an improved perceived market outlook.

OFFICE

Industry experts predict that the remainder of 2019 will be a challenging year for retailers in Canada, though there are also opportunities for exceptional brands in various markets. There has been a slight slowing of international retailers setting shop in the country and landlords have been saying that it has become harder to lease retail space.Several major chains announced that they were closing stores, however at the same time, some chains such as, Lululemon and Aritzia and Canada Goose, are seeing tremendous sales growth, boasting storefronts selling well in excess of $10-million each. Apple stores continue to be productive and electric car retailer Tesla’s mall locations can do astronomical numbers.Experts say that international retailers will continue to descend on Canada as the country remains an attractive growth market for companies testing the waters before expanding into other global markets.Canada’s shopping centres continue to outperform those in the United States overall. This trend is expected to continue into 2019 as landlords invest heavily in their properties.

RETAIL

Source : macleans.ca, RE/MAX, CBRE, Financial Post, Colliers, Bloombergstruc5

fcell.

CANADA

+(1)905 564 2344+(1)905 564 6744+(1)647 669 9222

fcell.

6705 Tomken road unit 226,Toronto (Mississauga) L5T 2J6

by YOUSAF IQBALDirector of IQI Canada

Sources: Arabian Business, JLL, Propertyfinder

DUBAI

+971 4 352 474 8

+971 4 352 474 3 Al Moosa Tower 1, Level 3,305, Sheikh Zayed Road,P.O.Box 9567 Dubai

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Developers in Dubai have been progressively reducing the unit size to make properties more affordable for investors and end-users. However, the average price per square foot has progressively increased over the years.For example, communities like Business Bay, Dubai Hills Estate, Meydan and Mohammed Bin Rashid City are where several off-plan projects are seeing a reduction in size. In Business Bay, 1 bedroom apartments, which are currently being transacted as off-plan, used to be around 600 sq. ft. , nowadays an off-plan studio in the community measures only 454 sq. ft.Meanwhile, in Dubai Hills Estate, Meydan and MBR City, off-plan studios have shrunk from 539 sq. ft. in 2016 to a mere 372 sq. ft. today. This is a little more than the average size of a mid-market hotel room in Dubai.Townhouses and villas are no exceptions. They have also seen their sizes shrink. Based on a comparison of 2,275 transactions in 2015 and 2019, the size of transacted ready 2 bedroom villas/townhouses reduced from an average 2,620 sq. ft. in 2016 to 2,046 sq. ft. in 2019. While the size of transacted ready 3 bedroom villas/townhouses has shrunk from 2,836 sq. ft. to 2,374 sq. ft. across 3 years.In a nutshell, comfort and affordability is the new mantra.

RESIDENTIAL

As Dubai gears up for Expo 2020, Q1 2019 saw multiple projects being re-commenced in the commercial sector and the highest number of deliveries in a single quarter for a number of years in the residential sector.The performance of the office market remained soft with average rental rates continuing to face downward pressure. Even today prime commercial areas are maintaining their demand.

OFFICE

Dubai developer Meraas has signed an agreement with Singapore-based Chinese company Samanea Group that will see an AED 1 billion ($272 million) mall come to fruition in 2021 near Dubai International City.Samanea Group will develop the 570,000 sq. ft. retail outlet which will focus on home appliances and furniture from small, medium and big Chinese businesses seeking a foothold in the GCC market. The mall will also hold space for 1,800 parking spaces.Along with the above, EMAAR MALLS are planning to distribute $354 million cash dividend.Emaar Malls said it maintained strong occupancy levels across its assets – The Dubai Mall, Dubai Marina Mall, Souk Al Bahar, Gold & Diamond Park and the Community Retail Centers – at 93 percent.The malls and retail centers together welcomed 136 million visitors in 2018, an increase of 5 percent over the total visitor footfall of 130 million in 2017.

RETAIL

by OMER ALI KHANDirector of IQI Dubai

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There is an estimated 15.7 million sq. ft. or 26 purpose-built offices (PBO) that will be entering the market by the end of 2021. Industrial buildings and shop offices will be offered at lower prices compared to PBO, which reflects decrement on rental rates and vacancy rates.Rental costs are expected to increase due to increment on maintenance costs. Investment is applicable for shop offices in Kuala Terengganu where investors can expect an increment of 6.5% -7.5% rental rates.

OFFICE

In Greater KL, there are around 245,000 new residential units under construction, reflecting increments of 10% to 12% in the next few years. In the whole KL enclave, the area with highest enquiry per property listing is Damansara Heights, TTDI & Kampung Kerinchi (Bangsar South). In Selangor, the highest enquiry per property listing is Cyberjaya, Bandar Utama & Petaling Jaya. While the valuers association is predicting that the current glut in property will not go on for much longer, the Rehda has pointed out that the main hurdle to overcome is the tight financing by banks.

RESIDENTIAL

In 2020, 11.3 million sq. ft. of retail space will be entering the market which may increase vacancy rates. It is expected that the retail industry will recover and expand by 3.1%, with pharmacy and personal care expanding the fastest by 12.7%, followed by department stores by 7.6%. Fashion and fashion accessories segment see a 0.1% growth while other specialty stores are expecting a 5.8% growth. During the third quarter of this year, retail sales are expected to expand by 3.9%.

RETAIL

Sources: The Star, CBRE

MALAYSIA

+6 03 7450 6655

VSQ@PJCC,Block 6-10-1, Jalan Utara46200 Petaling Jaya, Selangor

VISIT www.iqiglobal.com FOR MORE INFORMATIONSource: Business World, Colliers, JLL

PHILIPPINES

+632 551 9215

RM 272, 2F Comfoods Buildings,Sen. Gil. J. Puyat Avenue,Corner Chino Roces StreetMakati City

OFFICEWith an additional 900,000 sq. ft. of office properties entering the market in 2019, vacancy rates will realise an impact of up to 5.3% by the end of the year, while rent rates are estimated to increase 9%.Gaming firms holding secured licences are looking for additional workspaces.

RESIDENTIALAn estimated 15,100 units will be delivered in 2019, almost half of which are scheduled for the Bay Area. Secondary market vacancies are said to drop by 11% with lease rates remaining flat.The luxury market in Manila is somewhat smaller; however, the demand has been stable over the past few years. Luxury condominium demand will remain strong due to Metro Manila’s attractive rental yields in the region at 5.1%, relatively low prices, and sustained demand from affluent locals, foreign investors, and offshore gaming firms.The Bangkok Sentral ng Pilipinas officials are seeing a strong demand for commercial and residential properties.

200,000 sq. m. of new retail spaces will be completed in 2019. Despite the new supply, vacancy will remain at 8.5% and lease rates will record growth of about 1.5% y.o.y.The F&B segment will be the main driver of retail space absorption in the next 3 quarters of 2019.There is expansion in retail space outside of Metro Manila as well. High demands from local and foreign brands increased the vacancy rates to 3.7%.

RETAIL

Source: : RETalk Asia, CBRE, Colliers International, Savills

THAILAND

+66 81 909 0599

128/405 Unit F, 37th Floor, Phyathai Plaza Building, Phyathai Road, Thung-Phyathai, Ratchathewi, Bangkok 10400 Thailand.

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The global retail landscape is shifting towards online retailers and e-commerce. Bangkok’s retail landscape is also following suit, according to CBRE. Physical retailers are focusing on bringing something new that cannot be replicated online, which are the experience-rich shopping centres or the ‘retailtainment’ destinations. CBRE expects the retail market to be positive following the economic recovery. Occupancy rate will remain high, but there is a considerable amount of future supply. Struggling centers will have difficulties to maintain and attract tenants with the dual threat of e-commerce and future competing supply but rent will remain the same.

RETAIL

According to the Real Estate Information Center (REIC), Thailand’s housing market size is estimated to be around USD 20 – 26 Billion in a year. REIC forecasts the market size in 2019 to be approximately USD 25 billion, consisting of housing value transfers which is around 23 percent of the national budget. It shows that Thailand’s housing market is a substantial and sustainable market that is capable of coping with the economic statein 2019.From 2015 – present, Thailand has earnestly invested more than USD 75 billion to develop several new mega infrastructure projects including railway and airport upgrades. Thailand is planning to increase its competitiveness, and potentially become an economic hub of the ASEAN Economic Community (AEC), in terms of trade and investment. Consequently, it will create greater growth in housing demands in Thailand.

RESIDENTIAL

by SOMSAK CHUTISILPDirector of IQI Thailand

The average asking rent for a Grade A building in Bangkok’s CBD stock has reached THB 1,007 per sq.m. per month, representing q.o.q and y.o.y increases of 0.7% and 2.2%, respectively. The average Grade A occupancy rate is at 94.6%, decreasing slightly by 0.3 ppt q.o.q, due to completion of new stock. Total Grade A CBD stock has reached approximately 1.3 million sq.m., with Singha Complex adding an additional 60,000 sq m, representing a y.o.y increase of 7%. There is approximately 168, 000 sq.m. of Grade A CBD office space, both under construction and planned, projected to be complete by the end of 2020.

OFFICE

Sources: JLL, CBRE, Baker Mckenzie, batdongsan.com.vn, cafef.vn

VIETNAM

+84 28 3910 4855

2nd Floor, Capital Place,6 Thai Van Lung, District 1,Ho Chi Minh City, Vietnam

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Ho Chi Minh City witnessed the number of co-working spaces drastically increase over the span of two years, at over 90% p.a. to reach over 37,000 sq. m. as of studied period. The CBD has the highest concentration of co-working spaces (20,000 sq. m.), representing a 56% share.Prominent players of the co-working spaces include WeWork, Regus, Dreamplex, Up, Compass and Kloud. These companies are anchor tenants in many buildings. The industry is expected to gradually develop due to demand from both the domestic and global establishments, who are interested in minimizing costs, boosting flexibility and gaining traction in the market.

OFFICE

According to CBRE, the apartment market in Hanoi, for the first quarter of 2019, has the highest number of open sales. Consequently, a total of 11,822 open apartments were sold from 26 projects, up 46% over the same period back in 2018. It is worth mentioning that most of the apartments that were sold are from the opening of big projects such as Vinhomes Ocean Park (Gia Lam district) and Vinhomes Sportia (Nam Tu Liem district).In terms of location, the Eastern area is the leading area for new supply with 57% of units opened for sale in the first quarter.

The affordability of the housing market in Vietnam has improved throughout the last three years. The ratio of price-to-income decreased from 34 in 2016 to 21 in 2018 due to Vietnam’s booming High Net Worth Individual (HNWI) and middle class. Hanoi’s price-to-income ratio stood at 17, better than Vietnam’s overall position. The sales have increased since 2014, growing 28% per annum.

RESIDENTIAL

Service tenants are the main contributors to the high level of footfall, though service tenants achieve lower rent as compared to clothing and accessories shops, as these tenants are looking for longer leases. The newer retail centers have a large number of service tenants to increase the overall occupancy. Ho Chi Minh City CBD is in a state of instability, with major new developments underway that is bound to change the whole nature of the area. The Metro will have strong influence, especially around its terminus at Ben Thanh. Many international retailers are considering their strategy and taking into account longer term positions.

RETAIL

HANOI

IMPROVED APARTMENT AFFORDABILITY

#IQIMoments

IQI Nationwide Screening ofAvengers: Endgame

Global BusinessLeadership Awards

2019

IQI Turkey Incentive Trip

Asia’s Global Real Estate Partnerwww.iqiglobal.com

We had an extraordinary time in April, as all of our IQI heroes gathered together to join the Avenger in their last stand. It was an amazing emotional roller coaster filled with fantastic action scenes. We are happy to have shared this moment together.

We received the award for Excellence in Investment and Advisory Firm for everything we’ve done so far during this year’s Global Business Leadership Awards Gala Dinner. It was great honor to be recognised for our work and we promise to continue to bring the absolute best as we continue to grow.

Last month we explored the culturally diverse land of Turkey, full of history, art, poetry, and exquisite delicacies! Team #IQI had a magnificent time, and we will never forget the memories we createdduring this extraordinary trip.