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Rising rates, but most of Asia stays above water

7 December 2018

Interest rates are trending upwards across the world, led by the US, where the Federal Reserve Bank is trying calm the economy.

Rising interest rates can be bad news for real estate, as they increase the cost of borrowing and also raise the risk-free return from investing in 10 year government bonds.

The Savills World Office Yield Spectrum shows yields from CBD Grade A office property in major markets around the world and compares them with local 10 year bond rates to give market risk premium and effective risk premium for each city.

The data for H1 2018 shows Hong Kong, Shanghai and Jakarta in negative territory, with Hong Kong the most sensitive to rising US interest rates over the next year.

Further reading:
Savills UK Research