The investment volume for the APAC commercial real estate market was at US$68 billion (S$92.5 billion) in H1 2021 or 63% of the full-year turnover in 2020.

With investment activity significantly picking up, Asia Pacific’s (APAC) commercial real estate market is expected to continue its recovery in the second half of this year, according to CBRE.

APAC saw investment volume hit US$68 billion (S$92.5 billion) in H1 2021, which is equivalent to 63% of full-year turnover in 2020.

With demand recovering from last year’s low, office leasing activity in APAC gradually improved this year. In H1 2021, net absorption increased by about 20% year-on-year (YoY), buoyed by North Asia’s strong performance.

CBRE expects full-year leasing demand to reach 10% to 15% YoY, an increase from its earlier forecast of 5% YoY growth.

“Resilient markets like Singapore, Taipei and Seoul are expected to see Grade A rents rise above pre-pandemic levels by 2023,” it said.

It noted that regional office market conditions “will continue to favour tenants as around 60% of full year new supply is due to come onstream”.

Ada Choi, CBRE’s Asia Pacific Head of Occupier Research, Data Intelligence and Management, said office occupiers should take advantage of the leasing market weakness by considering flight to quality relocations or pursuing lease negotiations.

“On the landlord side, now is the time for owners to prioritise raising portfolio occupancy by offering attractive terms to secure high-quality tenants,” she said.

Meanwhile, retail sales in most APAC markets returned or surpassed pre-pandemic levels in H1 2021, as pandemic-driven consumption trends favoured “daily necessity-driven neighbourhood retail, luxury, and sporting goods and activewear sectors”.

“Their relatively resilient performance has in turn underpinned leasing demand and flight-to-quality relocations,” said CBRE.

As such, regional rents are expected to stabilise next year, with rents in daily necessity-driven neighbourhood malls showing greater resilience.

APAC’s logistics market, on the other hand, witnessed robust expansion by third-party logistics and e-commerce platforms. 

Net absorption in Asia reached 35.6 million sq ft in H1 2021 – the highest first-half figure on record.

Logistics rents in APAC performed well during the first six months of 2021, registering an aggregate increase of 1.6% year-to-date.

With this, CBRE revised its “rental forecast upwards for markets including Beijing, Singapore, Melbourne, Hong Kong SAR, with rents in South Vietnam expected to stage a strong recovery”.

It also expects full-year investment turnover to hover at 15% to 20% — up from its earlier forecast of 5% to 10%.

“Bargain hunting investors may be disappointed as increased purchasing activity make discounted assets harder to find,” said Dr. Henry Chin, CBRE’s Global Head of Investor Thought Leadership and Head of Research, Asia Pacific.

“With office leasing demand continuing to improve, rents expected to stabilise in 2022 and return to growth in 2023, investors can consider counter-cyclical opportunities in the office, retail and hotel sector,” he added.

Source: CommercialGuru, 23 August 2021