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Increased global capital flows and growing optimism to buoy property investments in the region
HONG KONG, 9 December 2021 – Leading diversified professional services and investment management company Colliers (NASDAQ and TSX: CIGI) has revealed that quality office assets in major metropolitan markets like London, New York, Tokyo, and Sydney, have retained their allure and will be in high demand next year. Core and core-plus office spaces are the top global strategy picks, with 60% of investors stating these assets as their investment preference, while industrial and logistics (I&L) assets will be the most coveted.
Their appeal not only stems from the realisation that office demand is here to stay, particularly in cities supported by strong transport infrastructure and high amenity values, but also the ease of large-scale capital deployment that office assets represent. The rising cost of construction, viewed by four in five (81%) investors as a pain point, could limit new builds, renovations, and retrofit projects, amplifying the demand for existing quality office assets.
“Based on our 2022 Global Investor Outlook, pent-up demand and delayed transactions will translate into momentum next year. However, investors face an increasingly complex and competitive marketplace, coloured by new regulations and COVID-19 uncertainties. With the amount of dry powder readily available, offices in Tier 1 cities are seen as safe-haven assets that offer an attractive route to deploy capital,” said Tony Horrell, Head of Global Capital Markets at Colliers.
A standout year for Asia Pacific property investments
Across Asia Pacific (APAC), more investors are prepared to put into action their ambitious plans that have been delayed by COVID-19. Cross-border capital flows are also likely to return, as travel and business activity progressively returns.
Terence Tang, Managing Director, Capital Markets & Investment Services | Asia, opined: “Optimism across the Asia Pacific region continues to gather momentum and investors will have a clear appetite to expand their portfolios. Transaction volumes are recovering back to their pre-COVID highs, and asset operating performances remain in a cyclical upswing.”
Overall, I&L assets will be the most sought-after real estate assets in the region, with more than 20% of investors anticipating capital value gains of 10%-20% in value-add I&L assets in 2022, supported by tailwinds and large-scale economic transformation.
Significant interest continues to surround core-plus offices, which remain a popular asset class for regional investors in Tier 1 cities like Singapore, Sydney and Tokyo. 63% of the respondents indicated that they plan to invest in these assets, versus 54% last year.
Multifamily/built-to-rent (BTR) properties are also an increasingly sought-after asset class, with investors targeting both core and development projects. In Japan, this is a sector that is well established and has long attracted foreign core capital, whereas in Australia, it is an emerging asset class with development opportunities.
“BTR is essentially following the development of new infrastructure, which is a strategy we recommend across all asset classes. You need to look at what and where governments are building, the fundamentals of the land and invest in assets you can repurpose if required,” said John Marasco, Managing Director, Capital Markets & Investment Services | Australia & New Zealand.
Retail is for the opportunistic while specialised assets gain favour
Our survey shows that investors see significant potential for the appreciation and repurposing of retail assets. Around a third of the investors mulling retail allocations are targeting opportunistic (including change of use) investments. In addition, hotels are also an opportunistic target, with 38% of investors looking at this sector. Both hotel and retail sectors offer good opportunities in cities with large domestic markets, like Japan, Australia and Korea.
Specialised assets, particularly data centres, life sciences and healthcare, are expected to help boost investment volumes in 2022, with student housing also poised for a comeback as Australia, the region’s main market, opens up to international visitors.
“This interest in alternative assets will continue to grow in most Asian markets, as investors seek new avenues of growth and returns amid the changes brought about by ongoing technological evolution and healthcare needs,” said Tang.
ESG considerations are growing in importance to investors
The report also shows ESG (environmental, social, governance) considerations remain prominent, with nearly three in four investors surveyed globally integrating environmental factors into their strategies. This desire to invest with intent is both a means of future-proofing their assets and responding to stakeholder and societal pressures requiring them to respond to the climate crisis.
ESG has also become a strong focus in APAC, as it will soon be a priority in the office sector as government and corporate tenants pressure owners to get their ratings up.
About the Colliers 2022 Global Investor Outlook
The second edition of Colliers’ annual outlook for global property investors is based on a focused survey undertaken by 300+ investors across the globe and in-depth interviews with Colliers’ regional Capital Markets leaders. The findings and opinions featured in the report are shaped by their responses.
This article was originally published in https://www.colliers.com/en-in
Download the Report Read MoreWe’re excited to share CATCH ’22, our Asia Pacific Commercial Real Estate Outlook 2022 paper with you.
With universal evidence supporting strong rebounds in business confidence and consumer sentiment, the Asia Pacific region is forecast to return to world leading growth in the second half of 2022.
Our paper focuses on key drivers of recovery, to ensure you CATCH the potential and opportunities of ‘22.
This article was originally published in https://www.cushmanwakefield.com/en/
Download the Report Read MoreDecember 6, Singapore – The Asia-Pacific region is set to continue its recovery from the pandemic, despite renewed uncertainty caused by the Omicron variant. Economies that have been hampered by lockdowns in 2021 will likely exhibit above-trend growth next year, according to Knight Frank’s latest report, Asia-Pacific Outlook Report 2022: Optimism and Opportunities Ahead..
Christine Li, head of research, Asia-Pacific, said, “The world and the Asia-Pacific region are now better equipped to cope with new variants, as vaccinations and oral medication for COVID-19 continue to gather pace. Although we are witnessing some knee-jerk reactions, over the next 12 months, we still expect most governments to move beyond lockdowns and transition to an endemic stage.”
“A wide range of indicators are pointing towards rebound and recovery in 2022, as Asia-Pacific enters a new cycle of growth driven by low interest rates and high inward investment. With these fundamentals in place, pent-up demand will fuel value growth across the region’s residential and commercial sectors,” Li added.
At a sector level, the report predicts an uplift of 20% in commercial transactions next year and a growth rate of between 3-6% for residential prices. Rents in the logistics sector are forecast to increase 2-3%, while office rents appear to be bottoming out to record more modest growth.
“As COVID-19 restrictions are relaxed, pent-up demand will support a solid recovery across the region. However, the trend will not be linear, and inevitably there will be bumps along the way in the form of new variants, supply disruptions, or ad-hoc restrictions. Fortunately, such setbacks are likely to be temporary and not distract markets from a solid broad-based recovery,” said Kevin Coppel, managing director, Asia-Pacific.
Sector Outlook
Office
Commenting on the office market, Tim Armstrong, global head for occupier strategy and solutions, said: “We are seeing an increased commitment to hybrid flexible workspaces as a part of occupiers’ strategies as we transition towards a COVID-endemic Asia-Pacific. Occupiers are recognising the impact of flexibility in facilitating employee engagement and cost optimisation.”
Logistics
“The quest to reconfigure supply chain strategies to become more resilient will result in sustained demand for modern logistics facilities, which will keep rents on an upward trend,” noted Armstrong.
Capital Markets
Neil Brookes, global head of capital markets, said, “Economies forging a path towards the next phase of endemic living will set the stage for a sustained resurgence of cross-border investment into real estate. Competition for assets will remain intense as investors look to deploy record dry powder accumulated, which will keep yields down.
“While core office with long lease expiries and logistics assets will be keenly sought after, we expect activity to turn active across all asset classes as the rotation towards riskier sectors gain traction. There will be ample scope for investors to be creative in the new normal and look towards value-add or opportunistic plays to generate alpha,” Brookes added.
The COVID-19 pandemic, in its protracted state, has put a spotlight on many real estate assets’ strengths and weaknesses, according to the report. Investors are increasingly shunning older assets regardless of geographies and focusing on assets that provide a resilient income stream.
Emily Relf, global head of capital strategies, said, “With yields compressing in Europe to record lows, overseas investors are looking to re-weight their portfolio from low-growth markets in Europe towards higher-growth Asian markets. Assets with strong ESG credentials will attract greater demand. Indeed, Knight Frank research shows a positive premium on sales price for green-rated office buildings in London, Melbourne, and Sydney, indicating that demand for green buildings is a global phenomenon and set to grow.”
Residential
“Residential markets across the Asia-Pacific region could continue to strengthen in 2022 as the region starts to recover in the endemic phase. With more quarantine-free travel lanes reopening, foreign buyers could return to key gateway markets sooner than expected,” said Victoria Garrett, head of residential, Asia-Pacific.
“Now is the best time for domestic buyers to pick up their dream homes, given the potential policy interventions that could hamper purchasing prospects in 2022,” Garrett concluded.
Download the Report Read MorePlease find below the rebalancing results for the following GPR/APREA index series, which will become effective as of 20 December 2021 (start of trading):
GPR/APREA Investable 100 Index
INCLUSIONS
|
CHN |
6158 HK |
Zhenro Properties Group Ltd |
|
JPN |
3295 JT |
Hulic REIT |
|
JPN |
3465 JT |
Ki-Star Real Estate Co. Ltd. |
|
PHL |
SMPH PM |
SM Prime Holdings |
EXCLUSIONS
|
CHN |
683 HK |
Kerry Properties Ltd. |
Liquidity too low |
|
JPN |
8986 JT |
Daiwa Securities Living Investment Corp. |
Liquidity too low |
|
MYS |
MSGB MK |
Mah Sing Group Bhd |
Liquidity too low |
GPR/APREA Investable REIT 100 Index
INCLUSIONS
|
AUS |
HDN AT |
HomeCo Daily Needs REIT |
|
IND |
EMBASSY IB |
Embassy Office Parks REIT |
|
KOR |
034830 KS |
Korea Real Estate Investment & Trust Co., Ltd |
EXCLUSIONS
|
NZL |
KPG NZ |
Kiwi Property Group Ltd |
Liquidity too low |
|
SGP |
CDREIT SP |
CDL Hospitality Trusts |
Liquidity too low |
GPR/APREA Composite Index + GPR/APREA Composite REIT Index
INCLUSIONS
|
AUS |
HCW AT |
HealthCo Healthcare and Wellness REIT * |
|
IND |
ASFI IB |
Ashiana Housing Ltd |
|
KOR |
034830 KS |
Korea Real Estate Investment & Trust Co., Ltd * |
EXCLUSIONS
None
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