Capitalisation Rate Of Singapore Office Assets

Capitalisation Rate Of Singapore Office Assets To Remain Stable: ULI

SINGAPORE – In the Urban Land Institute’s (ULI) latest Real Estate Economic Forecast, the property sector of the Asia Pacific (APAC) region is expected to remain “resilient” in the next few years, with largely stable capitalisation rates, reported The Business Times on Wednesday afternoon (8 June, SGT).

In particular, the capitalisation rate of Singapore office properties is projected to remain stable at 3.20 percent between 2022 and 2024.

As for Tokyo, it is expected to have Asia Pacific’s lowest office capitalisation rate of 2.60 percent this year. The rate will likely to slide to merely 2.30 percent come 2024, reflecting continued strong demand for office assets there, stated ULI in its semi-annual report.

On the other hand, Sydney and Shanghai are forecasted to have one of the region’s highest office capitalisation rates of 4.40 percent and 4.53 percent respectively in 2022. The rates could peak at 4.50 percent and 4.60 percent two years later.

“We believe Asia Pacific will continue to be on an upward trajectory between this year and 2024, pointing towards a sustainable recovery following the pandemic,” said ULI Asia Pacific’s President David Faulkner.

“Even so, short-term tailwinds remain, as inflation rates in the region’s largest economies are projected to accelerate rapidly. Against this backdrop, we are expecting the real estate sector to remain resilient in the next few years, with largely stable capitalisation rates across the office, logistics and retail segments.”

Of the countries surveyed, ULI expects Australia to record the strongest economic growth. Japan is also forecasted to see an “upbeat economic outlook” in 2022, with faster growth rates versus Hong Kong, China, South Korea, and Singapore.

The semi-annual ULI Real Estate Economic Forecast looks deeply into key economic and property data points of Singapore, Hong Kong, Shanghai, Tokyo, Seoul and Sydney, as well as additional indicators for China, Japan, nd Australia, and South Korea. Its findings are based on a survey of forecasts by economists and analysts at 10 real estate groups.

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