Connect with us on
Connect with us on
Whilst the consumption tax hike enacted in October created some unease during the final months of 2019, there was plenty of encouragement heading into the new decade. Indeed, with the Tokyo Olympics on the horizon, property sectors exposed to inbound tourism were particularly upbeat. All the while, the relative stability of Japan’s political and economic landscape continued to appeal to investors. This optimism quickly faded amid the onset of COVID-19, however, and one of Japan’s longest post-war economic expansions was stopped in its tracks. Whilst the country has managed the virus relatively well, a somewhat long road to recovery is expected given its modest potential GDP growth rate.
As for sector performance, the suspension of international travel has completely reversed the fortunes of the previously encouraging retail and hospitality sectors. In contrast, the structural changes brought on by the proliferation of e-commerce has thrust the logistics sector into the spotlight. Both the residential and office sectors, meanwhile, are going through some significant changes, and these varying reactions to the pandemic are also echoed in the J-REIT markets. Specifically, a recent correction in logistics-focused J-REITs notwithstanding, likely in response to the sector overheating, premiums remain significantly higher than its peers. Concurrently, the stark contrast between hard assets and listed vehicles, may reflect different views on sector prospects or give arbitrage opportunities to shrewd investors.
Download the Report Read MoreFlexible workspaces in India grew at a CAGR of 38% from 2017 to 2019, with many local and global operators entering the space, led by increasedFlexible workspaces in India grew at a CAGR of 38% from 2017 to 2019, with many local and global operators entering the space, led by increaseddemand from corporate occupiers or enterprise clients. As of end-February 2021, the total flexible workspace stock stood at 30 million squarefeet (2.8 million square meters), across the top six Indian cities. Due to muted demand amid uncertain conditions, 2020 saw flexible workspaceoperators lease 2.9 million square feet (269,000 square meters) of space, down by 75.8% from 2019. This was about 8.5% of the total leasingrecorded across the top six cities. Bengaluru, Hyderabad and Mumbai accounted for the bulk of transactions as some operators expanded theirfootprints, mainly in decentralized locations. Further, deals totalling around 1.7 million square feet (158,000 square meters), which were precommittedor in the final stages, were cancelled across the top six cities.
As of March 2021, about 65% of the desks on offer are leased, across the top flexible workspace operators’ portfolios. Though the bulk of thisspace is occupied by established corporates as opposed to freelancers or start-ups, and we think there is still scope for enterprise clients to takeupmore flexible workspace as operators are offering attractive prices for large or multi-location deals. The leasing period is currently about oneto two years as firms look at flexible workspaces as a temporary solution to accommodate their workforce until they finalize their expansion andfootprints beyond 2023.
Download the Report Read MoreIn their latest outlook report for 2021, Colliers estimates that institutional investments in Indian real estate will grow by 14.6% to INR 396 billion (USD 5.5 billion) from INR346 billion (USD4.8 billion) in 2020. For comparison, 2020 had witnessed a drop of 23% from 2019. Colliers believes that institutional investors continue to be bullish on Indian real estate asset classes such as offices, data centers and warehouses and they are looking to deploy their existing dry powder.
“The investment climate in India is very buoyant with global investors’ interest in real assets getting stronger. With global interest rates at historic lows and positive net yields in India, the country has emerged among the preferred destinations for investments in real estate. Further, the resilience of the Indian market is also evident from continued good housing sales performance across various markets, the large institutional investments in commercial office and industrial parks, and the listing of two REITs in the past six months.”
Download the Report Read MoreData centers: Critical infrastructure for the global economy: Growth opportunities and operational challenges for fund managers
White paper by SS&C
Read More
Hong Kong Island Grade-A office leasing demand remained soft in December amid weak economic conditions and the traditional offseason, but the overall market was buoyed by the professional sector, particularly the finance and legal service industries, which took up space in premium buildings in the CBD area. Two Chinese Mainland financial companies, the Bank of Dongguan and FountainVest Partners, leased an entire floor in Two IFC, which was previously occupied by Nomura Holdings. Medical companies also expanded their footprint in the core districts. A medical centre leased the entire top floor of 9 Queen’s Road Central to meet the increasing demand for healthcare and wellbeing. Given the weak economic situation, some tenants gave up more office space. With the current high vacancy rate of 7.8% on Hong Kong Island, we expect some landlords to soften their approach and be more willing to negotiate.
Kowloon Leasing activity in Kowloon continued to slow down in December. New lease transactions dropped by 20% on a monthly basis. Most of the leasing activity was in Kowloon East, at monthly rents below HK$25 per sq ft. While most industries have been largely affected by the COVID-19 pandemic, the logistics industry has remained strong and is one of the winners. Some logistics companies have taken advantage of this golden opportunity in the downbeat market to expand and upgrade their work environment and location. A recent notable example was the relocation of logistics giant DHL. It moved out of Megabox and took up a 91,015 sq ft space in the premium Grade A office International Trade Tower in Kwun Tong, making it the largest new lease acquisition in the market so far in 2020.After reviewing its office requirements, DHL chose to reconfigure its work pattern and adopt agile work practices to achieve workplace size optimisation. Curtailed by the pandemic and economic uncertainty, tenants will continue to be cost-sensitive and seek cost-effective options in Kowloon. Given the approach of the traditional festive season and the continuing unstable COVID-19 situation, we expect leasing demand to remain soft and the current low-level leasing volume to last until at least Lunar New Year.
Download the Report Read More
