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The wider GPR/APREA Listed Real Estate final dash in December brought total returns back into positive territory for the full year, largely on the performance of markets in Australia and Japan.
Australia’s property stocks have had an outstanding year in 2021 on strong earnings expectations. With inflation expected to remain manageable, the country’s central bank is under no significant pressure to tighten policy rates from the currently historic lows.
Gains were also registered across the rest of the region’s heavyweights, with the exception of Chinese stocks, which continued to remain pressured.
A series of asset sales underscored concern that equity investors will bear the brunt of losses as developers offload projects to repay debt.
However, signs are mounting that China will ease curbs on its property sector. To stem off downward pressure on the economy, the central bank trimmed banks’ reserve requirement ratio in December.
Download the Report Read MoreBy Esther An
Environmental, Social and Governance (ESG) integration is no longer a choice today. In the global Race to Zero[1], led by UNFCCC, over 5,200 businesses, 1,040 cities and 440 investors have stepped up their ambition and joined the global alliance to catalyse climate change. Following COP26, over 90% of global GDP has committed to achieving net zero by or near mid-century.[2] According to the 17th Edition of the World Economic Forum Global Risks Report, environmental risks were perceived to be the five most critical long-term threats over the next 10 years.[3] Climate risks are investment and business risks – the damage caused by climate change is projected to result in an increase of up to 41% of global property premiums until 2040.[4] With the building and construction sector accounting for about 40% of global carbon emissions[5], the real estate sector is in a prime position to advance sustainable development.
Integration: Strong Fundamentals for Business and Climate Resilience
City Developments Limited (CDL)’s ESG strategy stems from its corporate ethos, “Conserving as we Construct” established in 1995. Its value creation business model is anchored on four key pillars—Integration, Innovation, Investment, and Impact; guiding CDL to achieve three key deliverables: “Decarbonisation”, “Digitalisation & Innovation” and “Disclosure and Communication”. The CDL Future Value 2030 sustainability blueprint, implemented in 2017, maps out clear strategic goals and ESG targets across CDL’s business strategies and operations.
CDL’s sustainability portfolio reports directly to the Board Sustainability Committee with ESG factors effectively integrated into its business, operations and growth strategy. In 2018, the CDL Group introduced its G.E.T. strategy—focusing on Growth while adopting an ESG lens, Enhancement of assets to drive operational efficiency and Transformation to deliver long-term and sustained value.
Read MoreBy Esther An
Environmental, Social and Governance (ESG) integration is no longer a choice today. In the global Race to Zero[1], led by UNFCCC, over 5,200 businesses, 1,040 cities and 440 investors have stepped up their ambition and joined the global alliance to catalyse climate change. Following COP26, over 90% of global GDP has committed to achieving net zero by or near mid-century.[2] According to the 17th Edition of the World Economic Forum Global Risks Report, environmental risks were perceived to be the five most critical long-term threats over the next 10 years.[3] Climate risks are investment and business risks – the damage caused by climate change is projected to result in an increase of up to 41% of global property premiums until 2040.[4] With the building and construction sector accounting for about 40% of global carbon emissions[5], the real estate sector is in a prime position to advance sustainable development.
Integration: Strong Fundamentals for Business and Climate Resilience
City Developments Limited (CDL)’s ESG strategy stems from its corporate ethos, “Conserving as we Construct” established in 1995. Its value creation business model is anchored on four key pillars—Integration, Innovation, Investment, and Impact; guiding CDL to achieve three key deliverables: “Decarbonisation”, “Digitalisation & Innovation” and “Disclosure and Communication”. The CDL Future Value 2030 sustainability blueprint, implemented in 2017, maps out clear strategic goals and ESG targets across CDL’s business strategies and operations.
CDL’s sustainability portfolio reports directly to the Board Sustainability Committee with ESG factors effectively integrated into its business, operations and growth strategy. In 2018, the CDL Group introduced its G.E.T. strategy—focusing on Growth while adopting an ESG lens, Enhancement of assets to drive operational efficiency and Transformation to deliver long-term and sustained value.
Read MorePandemic 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/
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