Commercial Property Investments In Asia Pacific May Hit Record High

ASIA PACIFIC – CBRE expects commercial property investments in the region to increase by 5 percent to 10 percent to roughly US$150 billion this year after it jumped by 30 percent to US$140 billion in 2021 on an annual basis, reported The Edge on Saturday (19 February, SGT).

“Should this be achieved, it would set a historical high for annual commercial real estate transaction volume in the region,” said the real estate consultancy.

In particular, Singapore continues to be a major destination for cross-border investors, including those from Taiwan, Japan, and other countries in Asia Pacific.

Office properties are the primary target, following the completion of a series of core-plus and value-added acquisitions by international fund managers last year, in anticipation of steady rental growth amidst limited new office stock and robust leasing demand from tech firms.

In its latest report entitled 2022 Asia Pacific Investor Intentions Survey, CBRE stated that investors still have a strong buying appetite, with around 60 percent of the respondents intending to acquire more properties in 2022.

“International capital is expected to remain active, with more investors from outside Asia Pacific set to commit to new purchases to capture the region’s growth potential and diversify their portfolios.”

Specifically, property investors in Singapore, Australia and South Korea showed the strongest intention to buy real estate in Asia Pacific.

Although logistics remains as the most favoured property type for investment, interest has waned as compared with the survey in 2021, mainly because the market is expecting limited room for further growth in the logistics industry over the next three years after the 33 percent surge since 2010.

On the other hand, the survey’s findings indicate a stronger interest in office properties. “This is largely a consequence of investors adopting a more optimistic view of the outlook for leasing demand after the introduction of hybrid working was found to have only a negligible impact on bricks-and-mortar office requirements,” noted CBRE.

Compared with last year, more investors expect office demand to rise slightly (+10 percent) over the next 3 to 5 years. Grade A offices in prime locations are expected to be the focus as buyers seek to capture flight-to-quality demand.

Furthermore, office leasing sentiment improved across the region last, with the appetite for traditional office space picking up strongly. CBRE forecasts that office net absorption rate would rise 10 percent on an annual basis this year.