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Pandemic restrictions and geopolitical worries did not hold back Asia Pacific real estate investors in 2021, which should mean that any further improvement will be greeted by more optimism.
The region’s real estate markets were remarkably resilient in 2021, with an estimated 30% rise in volumes compared with 2020, a record bounce back. Whether there are similar levels of activity ahead is dependent on how the pandemic develops and the response of policy makers.
Omicron has scared governments worldwide into clamping down on travel and trade, however markets have been less concerned about a variant that appears to cause milder symptoms. Higher vaccination rates (Asia is 50% fully vaccinated but some nations have more than 70% double-jabbed) and better treatments should encourage more countries to relax travel restrictions and ease social distancing.
There are reasons to be positive: Asia Pacific economies recovered lost GDP growth this year and will grow further in 2022, led by India (8.8%) and China (8.2%), although Hong Kong and Singapore forecasts (6.5% and 6.4% respectively) are also bullish. The weight of capital allocated to the region by private equity real estate funds suggests active deal making ahead. While a relatively benign inflationary environment suggests a modest interest rate rise.
Of course, there are risks, least of all around geopolitical tensions. The region’s economies are more integrated following recently negotiated trade agreements, and any tariffs changes or import restrictions will create a widespread negative impact.
If the same trends observed in 2021 persist then cross-border investors will remain focused on the larger, more liquid markets of Korea, Australia and Japan, while China’s investment levels, although high, will be driven by domestic buyers. For the international investor, Asia’s largest economy is beset by uncertainties over zero-Covid policies, debt bubbles and shifting government priorities. Hong Kong increasingly moves in sync with the Mainland. Singapore’s stability, however, should maintain its allure.
Industrial & logistics will continue to be the favoured sector, despite supply chain disruption. The sector has come to encompass a broader range of uses including manufacturing and storage, R&D, data centers, high-tech manufacturing, last mile delivery/urban logistics and temperature-controlled facilities.
Life sciences, flexible office space, senior housing and multifamily housing will remain popular. The prospects for the traditional offices, high end or tourism-related retail and hospitality are less certain. The pandemic, combined with advances in technology and changing habits, is causing investors to rethink strategies. Regional retail and hospitality rely heavily on cross-border tourism, particularly from mainland China, and without a resumption of travel it is difficult to see a way forward.
Older offices in core business districts face challenges from technology-enabled hybrid working. Meanwhile, younger generations expect a different experience from seasoned staff, with a greater emphasis on wellbeing, collaborative spaces and virtual communications.
Sustainable buildings are attracting investors, developers and occupiers, among a rising tide of regulation and a growing awareness of ESG. Net zero pathways and low energy buildings will become a priority over the coming years. Mounting evidence of a ‘green premium’ suggests a tangible shift is underway and investors don’t want to be left behind.
This article was originally published in https://www.savills.com
Download the Report Read MoreCushman & Wakefield’s Office Fit-out Cost Guides provide an indication of the fit-out construction costs for occupiers across key cities around the world. Whether it’s a basic, collaborative, or advanced hybrid fit-out requirement, these Guides compiled by our Project & Development Services team serves to assist occupiers in defining their capital planning and relocation budgets.
The Guides include a comprehensive fit-out cost section covering furniture, professional fees, mechanical & electrical works, construction works, audio visual/IT and other miscellaneous costs, as well as reinstatement and retrofit costs.
Estimated costs provided in our Guides are indicative of market averages based on certain assumptions. Exact costs for specific projects may differ to those presented – we recommend engaging a Project & Development Services professional to advise on precise costings based on your unique construction requirements.
Asia Pacific Guide 2022 Highlights
One clear factor that has come out of the COVID-19 pandemic so far has been the resilience of the Asia Pacific region.
However, many uncertainties remain especially around what the office of the future will look like and how employees will occupy and use that space. With this we have seen a shift in how corporates are envisioning their space requirements, which in turn impacts fit-out decision-making, all within an environment where costs are still being closely scrutinized.
For 31 key cities across 14 markets in APAC, this year’s Guide External Link covers:
This article was originally published in https://www.cushmanwakefield.com/
Download the Report Read MoreThe Market Outlook for 2022 looks at Hong Kong’s core sectors (office, industrial, retail, investment) and has forecast a measured yet steady market stabilisation in year of continued recovery, renewal and reset. The research explains we expect a moderate start to the year, with momentum gathering pace from the second quarter onwards. Prices and rents have reset to a more attractive level, and we see now as a good time for investors and occupiers to drive their real estate strategies to capitalise on growth opportunities.
This report was originally published in https://www.colliers.com/
Download the Report Read MoreKnight Frank's Asia-Pacific Prime Office Rental Index saw a 0.3% quarter-on-quarter increase, the first uptick since Q3 2019, before the start of the pandemic. Overall vacancy remains elevated at 12.8%, but office rents are likely to have bottomed out, thanks to improving business sentiments and a gradual and more sustainable return to workplaces, especially among big tech occupiers taking advantage of lower rents to move into high-quality CBD office spaces.
While conditions remain tentative due to the Omicron variant, we expect rents to continue stabilising into 2022 with more markets in the region reaching an inflexion point in the rental downcycle. As occupiers continually evolve their space strategies on the adoption of hybrid working styles, 2022 will be a year of reset and experimentation. However, this does not mean less demand for office spaces. We expect leasing activity to strengthen into 2022, with demand underpinned by the integration of flexible space solutions and a pivot to quality spaces that emphasises wellness and employee experience.
This article was originally published in https://www.knightfrank.com/
Download the Report Read MoreExplore a unique way to assess and score 55 global primary and emerging data center markets utilizing 13 criteria.
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