Asia Pacific real estate investment volumes to rebound in 2021
The rebound in investment activity is supported by “greater investor confidence as Asia Pacific leads the economic recovery across the world”.
After a subdued 2020 primarily due to the COVID-19 pandemic, the Asia Pacific region is expected to see total real estate investment volumes bounce back to around US$165 billion (S$220.7 billion) in 2021, which is around 90% of the 2019 level, according to Cushman and Wakefield.
The rebound in investment activity is supported by “greater investor confidence as Asia Pacific leads the economic recovery across the world”.
“The region is also riding on the positive momentum off the back of a surge in investments in the last quarter of 2020,” it said.
However, Cushman and Wakefield expects the pace of recovery to vary for different markets across the region.
It expects Mainland China and Japan, which performed comparatively strongly last year, to recover first to pre-COVID-19 levels.
South Korea posted an impressive performance last year, registering the highest annual investment volume since 2015. Cushman and Wakefield expects the robust investment activity to continue with overall volumes hovering around the same levels seen in 2019 with some upside potential.
Singapore and Australia, on the other hand, saw 2020 volumes drop 73% and 45%, respectively. Both markets, however, showed renewed activity levels by end-2020, indicating a further uplift into 2021.
“While Hong Kong saw a similar uptick in 2H 2020 and volumes are expected to lift in 2021, they are still likely to remain subdued in comparison to the 2015-19 average of US$21 billion (S$28 billion),” said Cushman and Wakefield.
“India saw a strong performance in 2020 and investment momentum is expected to be sustained as it attracts increasing attention from international investors.”
From a property-type perspective, Cushman and Wakefield expects logistics to “remain a key focus as e-commerce continues to flourish and supply chains evolve”.
It noted that the region’s logistics and industrial sectors have a strong growth trajectory as they benefit from relatively lower cost base and increasing working-age population.
Data centres also offer tremendous growth potential, on the back of the acceleration in cloud connectivity.
“Asia Pacific markets are expected to perform well as data center destinations given the rapid development of technology platforms and networks across many of its markets,” said Cushman and Wakefield.
It also expects offices to continue to be a much sought-after investment asset, especially those in prime locations.
“As companies calculate the impact of remote working on their office occupancy needs and begin to make longer-term commitments, the office market should see some increase in momentum in the second half of this year.”
Cushman and Wakefield expects convenience/necessity retail to remain resilient, while experiential retail may take longer to recover due to pandemic restrictions.
Source: CommercialGuru, 5 Mar 2021