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The appetite for commercial properties in Asia Pacific is expected to remain strong this year amidst a low interest rate environment and favourable long-term macroeconomic fundamentals in the region. However, overall investment activity will likely be influenced by tight pricing and limited availability of investable stock, revealed a new report from CBRE.
“Asia Pacific’s commercial real estate market continues to acclimatise to a new normal of evolving demographics and less consistent economic growth. With the reality of low yields and sluggish rental growth, investors will be more diligent in 2017 when deploying capital and managing property assets,” said CBRE’s CEO for Asia Pacific, Steve Swerdlow.
In particular, the cities of Hangzhou and Chengdu in China, as well as Japan’s Osaka, Nagoya and Fukuoka are projected to be attractive to investors.
On the other hand, occupiers are expected to remain cautious towards committing space in decentralised locations in emerging Asian markets like India, the Philippines, Vietnam and Indonesia due to concerns over infrastructure and transportation.
In the office sector, technology firms would lead leasing demand across the region due to their profitability and rising headcount, while the appetite for space by the finance industry will be driven by domestic companies in larger markets, including China, India and Japan. In addition, co-working is expected to become more trendy.
The region’s retail property market will also continue to attract global brands due to its positive demographic and economic trends. Expansions by F&B operators are projected to remain robust, whilst leasing demand from sportswear firms will accelerate, given the growing interest in health and fitness.
Meanwhile, the outlook for Asia Pacific’s industrial property sector remains promising thanks to the growing popularity of online shopping, with demand, supply and rentals all pointing to consistent growth in 2017.
“The low yield environment will continue to encourage investors to seek opportunities outside conventional asset classes and take advantage of new demand resulting from changes in consumer behaviour,” noted CBRE Asia Pacific’s Research Head, Dr Henry Chin.
For instance, the ageing population remains a prominent theme in the region’s property investment market, creating demand for housing and medical facilities intended for this group, he added.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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