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Asia's 6 biggest construction projects of 2017

For the world's most expensive infrastructure and transport developments, look no further

A construction site in the Beijing Central Business District. Sean K/Shutterstock


Some of the highest-value construction projects in the world for this year are all located in Asia, as per the Arcadis International Construction Costs 2017. Construction markets in the region are expected to see an expansion of 5 to 7 percent a year, despite easing growth rate over the past 18 months.

Despite the exorbitant cost of the region’s biggest projects, they are all worth it in the end. Last year, the built environment contributed to USD36 trillion of the global GDP.

Count down to the biggest, highest-value construction projects in Asia this year:

6. Chengdu Tianfu International Airport

Construction works in Chengdu, Sichuan Province, China. LP2 Studio/Shutterstock[/caption]
China will increase the number of civil airports to 260 within three years. One of the more high-profile air complexes will be the Tianfu International Airport in Chengdu, which will receive a USD11-billion outlay. It will be the first airport in the country to have decentralised terminals. Up to 90 million passengers and two million tons of cargo are expected to pass through the air hub every year by 2045.

5. Beijing Daxing International Airport

Construction at Beijing Central Business District in April 2016. testing/Shutterstock[/caption]
Of the 130-plus airports cropping up across mainland China, the Beijing Daxing International Airport is the biggest yet. It will serve as a replacement of the Beijing Nanyuan Airport, and is on track for a 2019 opening. With a construction value of USD13 billion, Daxing Airport is expected to handle at least 80 million passengers every year.

4. Jeddah Economic City

A view of Jeddah Corniche at the edge of the Red Sea, Jeddah, Saudi Arabia. drpyan/Shutterstock[/caption]
The project formerly known as Kingdom City is a USD20-billion construction behemoth of homes, hotels, and office towers. This includes Jeddah Tower, set to be one of the world’s tallest structures upon completion. Jeddah Economic City will sprawl for two square miles.

More: What can Sri Lanka do to attract more foreign direct investment?

3. Dubai Al Maktoum Airport

Construction workers having a break in Dubai, United Arab Emirates. Rastislav Sedlak SK/Shutterstock[/caption]
Dubai pushes the envelope yet again in superlative construction projects with a USD33-billion investment on its the Al Maktoum International Airport. Set to relieve increasingly monstrous air traffic in the emirate, Al Maktoum is envisioned to become the world’s largest airport with an annual capacity of 220 million passengers and 16 million tons of cargo.

2. Delhi Mumbai Industrial Corridor

Golden hour over building construction in Noida, Delhi, India. Amlan Mathur/Shutterstock[/caption]
As its name suggests, this project covers a wide swath of the continent between the largest metropolises of India. Valued at USD90 billion, the corridor will encompass 24 industrial zones, across seven states and eight smart cities. Part and parcel of the project is the 1,500-kilometre long Western Dedicated Freight Corridor, set to be finished at the end of 2019.

1. One Belt, One Road

Construction site at Shanghai's Bund area. Captain Yeo/Shutterstock[/caption]
Taking inspiration from the Silk Route of yore, China is rabidly paving the path for its ambitious One Belt, One Road (OBOR) initiative. This is China’s biggest spending spree yet: a mammoth, 13-year investment in energy and transport infrastructure that spans Eurasia, Central Asia, Oceania, North Africa, and Southeast Asia. The program is two-pronged, focusing on landbased projects as well as maritime investments. OBOR, currently valued at USD150 billion, is widely regarded as China’s launchpad into a bigger role in global affairs.


APAC investors now seek higher yield over capital appreciation

And 5 other things we learned from the 2017 Asia Pacific Investor Intentions Survey

Tsutenkaku Tower in Osaka's Shinsekai district. jannoon028/Shutterstock[/caption]

Investors in Asia and the Pacific still have an interest in outbound capital outflows with most respondents intending to invest around the same amount year-on-year, according to the fourth annual Asia Pacific Investor Intentions Survey by CBRE.

Getting no benefit from further cap rate compression, capital appreciation fell from its perch as the strongest motivator for investing in real estate in 2017. Around 37 percent of respondents are now looking primarily for higher yield spread, indicative of a stronger appetite for higher-risk assets.

Last year’s survey saw 15 percent citing higher yield as the main motivation.

“The pursuit of higher yield is pushing investors towards a core-plus strategy, which means investing in prime assets in non-core areas, or non-prime assets in core areas,” said Robert Fong, CBRE Asia Pacific’s director of research. “The greater risk tolerance in exchange for higher potential returns is similarly reflected by the shift from value-add to opportunistic strategies, as the lack of prime assets for sale prompts more investors to take on development or redevelopment risk to build high quality assets.”

Here are the other things we’ve gleaned from the report:

Other sector types clamour for attention

Offices will still draw investors more than any other sector in 2017. Industrial and logistics is fast closing in as the most attractive sector, as e-commerce continues to disrupt the supply chain and logistics becomes an increasingly institutional investment product in itself.

Alternative sectors are also drawing attention, with the biggest increase in interest noted in specialty asset classes such as retirement living, senior housing and healthcare, noted Tom Moffat, executive director, capital markets, CBRE Asia. “Demand for data centers is also growing, particularly in Australia, Japan, Hong Kong and Singapore, whilst student housing in Australia has attracted strong demand from institutional investors amid the rapid increase in international students. Outside of Japan, multifamily assets haven’t been an established institutional sector in Asia, but we are seeing more investors exploring this strategy, including looking at development deals.”

Uncertainty dampens investment flows outside the region

Then there’s the ubiquitous spectre of global uncertainty and the re-advent of nationalism in the western markets on which APAC investors are keen. “While outbound interest remains strong, policy uncertainty in the US and Europe will prompt some Asia Pacific-based investors to focus on investing in their own region. This is consistent with the increase in cross-border investment within Asia recorded in 2016. While Australia and Japan continue to be the most sought after locations, emerging Asian markets and in particular Vietnam, registered increasing interest from South Korean, Japanese and Chinese investors,” said Tom Moffat, Executive Director, Capital Markets, CBRE Asia.

Perceived risks

Worries about global and regional economic growth still prevail among respondents, but this concern has fallen down to 25percent, compared with 46 percent in 2016. More investors are worried about faster-than-expected interest rate increases though, with 14 percent citing this as concern versus 6 percent last year.

More: China still has more billionaires than the US

The Americas on their mind

The property consultancy’s 2017 survey showed that Asia Pacific investors identified North America as their preferred destination for the second straight year, with South Koreans displaying the strongest intentions to invest abroad, spurred by political uncertainty and weaker economic growth at home, followed by Singapore and Hong Kong.

Chinese has a strong desire for overseas investment hampered only by the fact that stricter capital controls at the end of 2016 would mean that their investment flows could moderate.

Regional preferences

Australia is the number one cross-border investment destination for the second year in a row. Japan and China follow behind, respectively, but this is on the back of lowered interest. With strong macro-fundamentals, Vietnam is the fourth most preferred market for cross-border investment.

Read next: Vietnam is getting very rich (and other things we learned from the Knight Frank Wealth Report)


The foreign investor is Canada's newsmaker of 2016

In a year of concrete personalities, the non-resident buyer dominated news cycles

[caption id="attachment_59490" align="aligncenter" width="740"]The city of Calgary in Alberta, Canada. Alix Kreil/Shutterstock The city of Calgary in Alberta, Canada. Alix Kreil/Shutterstock[/caption]

The Canadian Press has named “the foreign investor” as the year's top business newsmaker, marking the first time since 2003 that the recognition was given to a nonspecific person.

Garnering 37 percent of votes from 27 newsrooms across Canada, the foreign investor trumped the next leading contender for the title, Alberta Premier Rachel Notley.

The choice of “foreign investor” as newsmaker of 2016 caps a year haunted by the specter of speculators driving up housing values in Canada’s largest cities. Policymakers in Vancouver notably levied measures on non-residents from buying or transferring property.

"It dictated what happened in other areas of the country," Dave Bradley, breaking news producer at Newstalk 1010 in Toronto, told The Canadian Press.

More: Seattle is the new Vancouver for Chinese buyers

Others took exception to the choice of an anonymous person for the recognition, noting that there were more deserving, concrete personalities. "I would vote for the foreign investor, except she seems to be mythical," said Douglas Cudmore, the Toronto Star's senior editor of business, innovation and justice, who thought Unifor president Jerry Dias more appropriate for the title.

In August, the British Columbia government imposed a 15 percent property transfer tax on purchases by foreigners in Vancouver.

Analysts caution against imputing the housing affordability crisis to foreign nationals. "It's really hard to argue that it's the major reason that prices are increasing," Andrew Scott, a senior market analyst for the Greater Toronto Area at Canada Mortgage and Housing Corp, said. "There's lots of other things that are going on at the same time. It's definitely a factor though. I'm not saying it's insignificant ... but it's definitely not the major force that some people think it is."

Read next: Vancouver home sales fall — should the new tax on foreign buyers take credit?

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