On Wednesday June 14 the U.S. Federal Reserve boosted its key short-term interest rate by 25 basis points to between 1.00% and 1.25%.
The move, which marked the third hike since December last year, had been widely anticipated and is therefore not expected to have a significant impact on Asia Pacific.
CBRE Research retains its view that Hong Kong and Singapore remain most exposed to higher interest rates and are highly likely to experience further increases over the remainder of the year.
While other Asia Pacific markets are not expected to follow the U.S. in raising rates in the short term, they remain mindful of potential capital outflows as investors search for higher yields.
Bank lending for property in Asia Pacific remains tight in spite of the lack of movement in interest rates. While CBRE Research sees little immediate pressure for yield expansion on commercial property, the yield spread over the lending rate is expected to shrink over the next 12 months.
This will make property prices more sensitive to future interest rate movements. However, the reduced likelihood of a total of…