Thought Leadership

Despite a challenging economic environment, data centres remain in focus for the commercial real estate industry in Asia Pacific, with notable market developments across the region.

CBRE's latest Asia Pacific report explores key data centre investment trends and outlook for the sector in the region, and offers insights into the data centre occupier and investment market in Australia, Hong Kong SAR, Japan, Singapore, India and Korea.

Key regional trends include:

• Investor demand for data centres is strong, with a wide range of buyers seeking stabilised assets. However, there remains a lack of stock for sale.
• Prevailing high interest rates continue to weigh on data centre investment. However, investment volume in 2024 is expected to recover from last year’s low base, driven by activity in Japan.
• In addition to increased activity by hyperscalers and more corporates moving towards a co-location approach, there has been a surge in AI-related demand since late 2023.
• Power supply, especially a lack of renewable energy, is becoming a major challenge for future data centre development. 

This report was originally published in https://www.cbre.com/insights/reports/asia-pacific-data-centre-trends-q1-2024

CBRE’s 2024 Global Investor Intentions Survey reveals buyers’ and sellers’ preferred strategies, markets and property types. Highlights of the report include:

• Global investors expect to engage in more buying and selling activity compared with 2023 amid growing optimism that the real estate investment market conditions will improve.

• Although some further cap rate expansion is expected, this trend should start to reverse by midyear.

• While investors in most markets remain cautious in H1 2024, expected interest rate cuts by midyear should lead to improved commercial real estate investment activity in the second half of the year.

This report was originally published in https://www.cbre.com/insights/reports/2024-global-investor-intentions-survey

Against a volatile economic backdrop, the Asia Pacific office market remains steadfast and continues to grow, with a broadly positive outlook. The need to innovate and evolve has not diminished. Companies are striving to meet their Environmental, Social, and Governance (ESG) targets, and new modes of working embrace flexibility, collaboration, and innovation, while fostering diversity and inclusion. The office is central to many of these transformative processes, with an increasing focus on building quality, fit out design, and raw material selection.

This year’s Guide takes a closer look at 33 key cities across the region, as well as:

• Key considerations for a best-in-class office fit out: creating office value, inclusive and sustainable design and partnership with landlords
• Cost estimates of three different styles of fit outs to cater to the post-pandemic workforce
• A comprehensive fit out cost breakdown that includes furniture, mechanical and electrical works, construction works, IT, audio visual and miscellaneous costs
• Three different levels of reinstatement costs, together with average retrofit costs

The pandemic spurred a sharp rise in e-commerce, causing global supply chain vulnerabilities that underscored the need for greater resiliency. Third-party logistics (3PL) warehouse operators had to optimise supply chain operations, cut costs and utilise new technologies. 3PLs have been highly effective, now dominating demand for industrial & logistics space, impacting real estate fundamentals and warehouse building design, and leading to further industry evolution such as fourth-party logistics (4PL) and reverse logistics.

3PLs have grown globally:

• Asia-Pacific: 3PLs accounted for 30%-40% of logistics leasing activity in 2023, with marginal growth ahead. This trend is driven by cost-cutting initiatives and a desire for efficiency amid logistics’ increasing complexity.
• United States: 3PL leasing activity accounted for more than 30% of bulk transactions (over 100,000 sq. ft.) since the pandemic’s onset due to significantly higher e-commerce, requiring corresponding warehouse space. Although economic uncertainty has slowed short-term 3PL growth, the long-term outlook is strong. 4PL will drive even more modern warehouse space demand.
• Europe: 3PLs have become a larger part of logistics leasing demand, increasing by 10+ percentage points since 2019. During this time, for XXL facilities (warehouses over 50,000 sq. m. or 580,000 sq. ft.), final occupiers have increasingly preferred to control the lease themselves and contract a 3PL to operate the warehouse.

This report was originally published in https://www.cbre.com/insights/reports/the-global-outsourcing-of-warehousing