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Commercial property investment in the Asia Pacific (APAC) region is forecasted to increase by 5 percent year-on-year to US$118 billion (S$160.68 billion) in 2015, according to the latest report from CBRE.
The demand for high-quality properties in APAC is also expected to be stronger in the coming years as the region’s economic growth outperforms the globe. In fact, Oxford Economics projects that the region’s economy will grow by 4.4 percent in 2015 compared to the 2.9 percent for the world.
This optimistic economic forecast is driven by Asia Pacific’s rapid urbanization, expanding middle-class, robust demographic growth and increasing number of wealthy households.
In term of office rental growth, Tokyo, Bangalore and Singapore are anticipated to record the highest expansion in the region for 2015. But the rate of growth in Asia Pacific is expected to slow down to 3.2 percent this year from 3.6 percent in 2014.
As for the retail segment, rents in Tokyo, Beijing and Shanghai are forecasted to expand at a faster pace than other markets. However, the overall rental growth for the region is likely to soften to 2.4 percent from 5.4 percent previously.
Finally, rental growth for industrial properties will likely be led by Hong Kong, Osaka and Shanghai, while APAC could post a gain of 2.9 percent.
Over at Singapore, monthly office rents will continue to rise in 2015 from S$11.20 per square feet last year, while the vacancy rate of Grade A premises is expected to tighten further from 5.8 percent in 2014.
In the retail segment, rents of prime retail space at Orchard Road are expected to increase this year from S$34.55 per square feet in 2014, while the island-wide vacancy rate could increase from 6.5 percent last year amidst the labour crunch and growing supply.
Finally, real estate investment transactions in the republic are projected to decline in 2015 from S$16.8 billion last year due to the looming interest rate hike and there are fewer properties available for sale. Nevertheless, investors are still keen on Singapore’s office space market.
“In Singapore, there are buyers for all asset classes who are ready to commit when the price gap can be bridged. But in particular, we expect continued interest in the office sector for both en bloc buildings as well as strata,” said Jeremy Lake, CBRE’s Executive Director for investment properties.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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