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Asian Real Estate Securities continue to oscillate in 2024 as rates expectations drive performance of REITs, Developers, and Asian currencies. One positive note is that globally fund managers are said to be the most underweight the real estate sector they have been since 2009, a year when entering the sector delivered several consecutive years of strong absolute and relative performance. Despite increases in yields and hawkish comments from Fed officials, the corrections have been shallow and on low volumes. MSCI changes which resulted in the deletion of several Asian REITs from their index had been an overhang and that was removed at month-end, enabling us to potentially see some improvements after well-flagged deletions led to underperformance as passive funds were sellers. We added to positions that were impacted as a result of these changes. Sentiment in the near term will likely be dictated by US employment data to be released at the end of the first week of June. Last month’s report showed an increase in the unemployment rate so any continuation of this trend may shift rate expectations yet again which would be positive for Asian REITs and currencies. Large discretionary consumer companies in the US have noted that lower-income consumers have been notably weaker, possibly as pandemic savings have been run down and higher costs crimp disposable income. Results and guidance behind us, the drivers for REITs and Developers are likely to be macro, but we could also start to see some uptick in corporate activity and buyback announcements.
Download the Report Read MoreThe real estate market in the Asia Pacific (APAC) region continues to exhibit robust growth on a global scale, despite the challenges posed by rising interest rates and housing crises in numerous countries. Significant technological progress in APAC economies has catalysed transformation within the real estate sector, with digitalisation and sustainability integration gaining momentum. These changes have also concurrently influenced the development of real estate projects within the region.
Globally, the real estate sector is increasingly embracing environment, social and governance (ESG)-driven innovations as a solution to issues such as escalating carbon emissions. This shift is evident in the updated real estate regulations within the APAC region for 4QFY24. Several APAC economies, including China, Hong Kong and Japan have implemented guidelines promoting green infrastructure and technology integration to confront this challenge.
Furthermore, commercial and industrial real estate is significantly rising in the APAC region despite constrained liquidity. In the housing segment, countries such as Australia, Singapore, China, India and Hong Kong have prioritised strategic reforms and regulations to address the housing demand. Notably, India and Singapore have initiated advancements within the retirement homes segment, catering to the needs of senior citizens seeking accommodation.
In spite of the prevailing challenges, APAC economies offer an attractive prospect for investors due to regulatory updates across various asset classes and types. These economies are predicted to play a pivotal role in channeling regional investments and fostering development in the forthcoming months.
Download the Report Read MoreSoutheast Asia foresees strong economic growth in 2024, with most major economies expected to accelerate despite challenges like inflation and geopolitical tensions. Easing inflation and increased investments are poised to further support growth.
Cushman & Wakefield's latest paper explores the promising growth prospects of Southeast Asia (SEA) in 2024. Forecasted to expand by 4.6%, SEA's economy is on an upward trajectory, outpacing the previous year's growth rate of 4.0%.
Singapore’s economic growth is set to improve to 3.0% in 2024, higher than 1.1% growth in 2023, albeit growth would be tempered by a still-high interest rates environment and global economic uncertainties.
Economic growth would be underpinned by a recovering manufacturing sector as external demand recovers and resilient demand for services given Singapore’s status as a regional business hub and tourism recovery. Overall property demand is expected to improve, albeit cautiously, and higher supply in some markets such as the residential and office market would crimp rental prospects.
View the Report Read More2024 is anticipated to be a more dynamic year for the Asia Pacific real estate industry. The ability to act quickly, dig deeply into markets and sectors to identify value, and forge productive partnerships will be key to making the most of the region’s resurgence.
Colliers' 2024 Investor Insights - Country Spotlight Series aims to provide real estate investors and owners with unique insights into the year ahead and a deep understanding of each market across the region. As investors evaluate their portfolios against the fast-evolving global landscape, this series provides a strategic view on the key market dynamics, outlook and opportunities, along with actionable insights across asset classes in Asia Pacific.
View the Reports Read MoreThe real estate market in the Asia Pacific (APAC) region has shown remarkable resilience and adaptability despite the rapidly changing global landscape. Geopolitical advancements in APAC economies have led to a transformation of the real estate sector, with technology and sustainability integration gaining traction. These changes have also impacted the development of fast-paced projects.
As the real estate industry around the world catches up with technology-led innovations, there is a shift towards environmentally friendly building practices due to rising carbon emissions. This shift is evident in the updated real estate regulations in the APAC region for 3QFY24. Many APAC countries, such as China, Singapore, Australia and Japan have introduced green infrastructure and technology-integrating guidelines to address this challenge.
Further, countries like Australia and Japan have shifted their focus from specialised asset classes, such as data centres and cold storage, to Build-to-Rent asset types. While demand from occupiers has weakened due to tighter liquidity, investors have shown a keen interest in commercial and industrial real estate. Moreover, a new theme of inclusivity and equal housing rights has emerged in economies such as Hong Kong and Japan, which is expected to impact other APAC countries in the coming years.
Despite the ongoing challenges, APAC economies present an attractive opportunity for investors due to regulatory updates across various classes and asset types. These economies are expected to play a crucial role in channelling regional investments and development.
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