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As Singapore exits the pandemic and business activity returns to normal, corporate occupiers are placing more emphasis on employee productivity and on increasing office utilisation. With workplace transformation underway, there is strong demand to adapt and “build a better office” to meet the fast-evolving needs of employees and senior management. Additionally, occupiers should be actively identifying new opportunities and strategies to future-proof their portfolios.

CBRE's 2023 Singapore Office Occupier Sentiment Survey features insights from occupiers across various industries such as financial services, technology, media, telecoms and professional services etc.

Key findings include:

• Singapore's median utilisation rate stands at 64% and this is expected to increase further over the next 6 to 12 months.
• Leasing sentiment remains cautious in near term with more opting for lease renewals and re-negotiations but 45% expect to grow their corporate portfolios over next 3 years.
• Strong demand for green buildings but amount of green premium remains low. 67% would be willing to pay a premium of less than 5%.
• Staff-to-desk sharing ratios set to increase as more companies adopt flexible seating and hybrid working. 67% plan to increase desk sharing ratios over the next 2 years.

This report was originally published in https://www.cbre.com.sg/insights/viewpoints/2023-singapore-office-occupier-sentiment-survey

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• In Q1 2023, the industrial rental and price indices continued their tenth consecutive quarter of growth. The rental index rose by 2.8% QOQ, accelerating from 2.1% QOQ in the previous quarter, and marking the strongest quarterly growth since Q3 2013. Similarly, industrial prices rose by 1.5% QOQ, slowing slightly from the 1.7% QOQ registered last quarter.
• With a remaining supply of 10.3 mil sq ft in 2023, and an average of 10.9 mil sq ft from present till 2025, higher supply will continue to moderate rental and price growth but may also provide more options for occupiers.
• Industrial indicators remain soft, with continuous contractions recorded in manufacturing output, NODX and PMI.
• Trade tensions have resulted in industry players looking to fortify supply chains, with some looking to set up shop in Singapore, which will continue to prop up industrial demand.

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CBRE’s 2023 Asia Pacific Real Estate Market Outlook Mid-Year Review reviews the predictions we made at the beginning of 2023, and reveals our outlook for the rest of the year.

Our original forecasts from January were largely correct, although the subdued impact of mainland China’s re-opening has led us to push back predictions for the expected timing of the recovery by 6 to 12 months. While leasing momentum in occupier markets is strengthening, the investment volume is unlikely to recover before H1 2024.   

This report explores the key trends and forecasts that will shape Asia Pacific’s commercial real estate market for the rest of the year and beyond.

Economy
Core inflation along with a stronger than expected employment market have reduced the likelihood of a hard landing in the U.S., with CBRE expecting mild negative growth to occur in Q4 2023 and Q1 2024. With the upward interest rate cycle having been prolonged, rates are likely to stay high for longer.

Investment
Asia Pacific commercial real estate investment volume is unlikely to recover before H1 2024 due to insufficient yield expansion and the higher cost of finance. Japan will remain attractive to investors on the back of low interest rates and positive carry, and hence will continue to outperform. Investment sentiment elsewhere is expected to improve once the cost of borrowing starts to come down. Korea, which was the first market to implement interest rate hikes in the current cycle, is now witnessing an increase in investment activity now that the cost of finance has begun to fall.

Office
While CBRE’s market forecast has been largely accurate, the recovery of office space demand has lagged office-based employment growth. Office occupiers retain a prudent attitude towards portfolio planning amid the challenging macroeconomic environment. Although flight to quality and a focus on green buildings remain key trends, expansionary sentiment has been subdued.

Logistics
Although logistics demand continues to gradually moderate from pandemic-era highs, regional rents displayed resilience in H1 2023, with performance bifurcating between tightly supplied markets, such as Singapore (prime) and the Pacific, and oversupplied locations. Rental growth in markets with a supply shortage will nevertheless lose momentum as demand tapers off.

Retail
The tight job market and resumption of international tourism underpinned strong consumer spending in H1 2023, boosting expansionary sentiment among retail occupiers.

Hotels
However, the slow return of mainland Chinese tourists continues to weigh on the recovery; a trend that is also impacting hotels, with the recent rise in room rates now showing signs of plateauing.

This report was originally published in https://www.cbre.com/insights/reports/2023-asia-pacific-real-estate-market-outlook-mid-year-review

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Cushman & Wakefield’s 2022-2023 Asia REIT Market Insight report investigates the growing Real Estate Investment Trust market in Asia, examining the primary drivers and state of play in key markets including Japan, Singapore, Hong Kong SAR, mainland China and India.

Overall, the Asia REIT market has experienced declines in stock prices and overall market values in 2022, predominantly due to the influence of the U.S. interest rate hikes. Despite this, the Asia REIT market has still performed better than its U.S. and European counterparts.

Key highlights:

• At the close of 2022 the combined value of the Asia REIT market was at US$263.8 billion, down 14.7% y-o-y. The mainland China REIT market value surged 80% on the back of new product offerings, but the remaining Asia markets all experienced declines in market value.
• Industrial/logistics, healthcare, and data center assets have been favored by investors as new growth drivers in recent years.
• A total of 17 new products were introduced into the China REIT market in the period from March 2022 to June 2023.
• REITs have also proven popular with investors in India. Consequently, we estimate that more than 20% of Grade A office stock in India will be held by REITs by the end of 2024.

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