Fundamentals Of Asia’s Office Markets Still Strong
ASIA PACIFIC – KKR’s Head of Real Estate in Asia, John Pattar, foresees that office markets across the region will remain “very strong”, reported Mingtiandi on Tuesday afternoon (19 October, SGT).
“Death of the office is very premature. With the office, it is about recovery,” said Pattar during a panel session about office investment in Asia’s core markets on Mingtiandi’s MTD TV video platform.
“This is driven by demand and supply, the old fundamentals of real estate. If we have economic growth, we have people going into industries and people wanting to be in Singapore, for various reasons that are technology-driven, Hong Kong is about finance, Seoul is a mixture of IT and finance, Japan is still the old economies of finance and economics, then you have growth in Australia with finance centred in Sydney.”
Another panellist, Rushabh Desai, CEO for Asia Pacific at Allianz Real Estate, believes that employees in the region are more likely to make a quick return to their workplace compared to other countries where staff have larger houses.
“In Asia Pacific, we have very densely populated cities and people have smaller homes so there is a natural tendency to come back.”
“The recovery is going to be bumpy out of this pandemic, but the good news is that people are getting used to it, quarantines and lockdowns, and, as this transition happens, people are returning to the workplace,” said Desai, who is based in Singapore.
However, another panellist by the name of Terence Tang, Managing Director for Capital Markets & Investment Services in Asia at Colliers believes that workers returning to the office will have higher demands and expectations regarding their workplaces, especially in terms of health and wellness.
“I think the value of the office will stay. But major occupants are expected to look for safer environments to safeguard their employees, and this trend could ultimately increase office rents.
“The requirement of having cleaner air within the building, filtration systems, all of these will be required and that would also mean higher maintenance costs,” said the veteran advisor, who thinks that these expectations may soon be included in local regulations.
“Particularly in mature cities like in Australia, Hong Kong, Singapore and even Shanghai and Beijing, I think governments will start imposing incrementally higher requirements in terms of safeguarding the occupants in the building, and that will affect the running cost of the property,” he added.