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Property markets throughout the Asia Pacific (APAC) region are expected to remain resilient despite weakening economic fundamentals in 2015, as investments continue to flow from a variety of domestic and international sources.
This was revealed by the research entitled “Emerging Trends in Real Estate® Asia Pacific 2015”, an annual forecast of global property investor sentiment published jointly by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC).
“Whether derived from new sources of institutional capital, or from almost six years of global central bank easing, a seemingly endless stream of money is now pointed at real estate assets across virtually all jurisdictions and asset classes. This is pushing up prices and further compressing yields,” said ULI’s Chief Executive for Asia Pacific, John Fitzgerald.
The report noted that there are fewer transactions and there exists a shortage of investment-grade supply in the region. It also said that while investors are looking for alternatives to core products, they are also shunning assets in secondary locations due to a spate of over-building.
However, one investment category that thrives in region is the logistics segment. The sector accounted for about 10 percent of the total commercial property transactions in the Asia Pacific, even though new supply in this segment declined by 30 percent in 2014 on an annual basis.
Additionally, the yields of logistic properties still exceed those of other sectors, but they are now as low as 4.5 percent in Singapore and 6 percent in Japan.
Nevertheless, demand is particularly strong in Australia, Japan, Singapore and China. The severe shortage of modern distribution facilities is also expected to last for years, given the growing popularity of online shopping across the region.
Logistics is “the hottest, most-crowded trade right now in Asia”, the report said, quoting a fund manager.
Meanwhile, the study’s respondents chose Tokyo, Jakarta, Osaka, Sydney and Melbourne as their top five Asian cities with the highest property investment potential in 2015. Shanghai bagged the six spot, followed by Seoul, Manila, Singapore and Beijing.
It is noted that for this study, ULI and PwC conducted extensive surveys and interviews with the most senior real estate professionals.
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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