Asia-Pacific leads the way

CBRE predicts that economic growth in the Asia-Pacific will continue to outpace the world average in coming years, leading to increased demand for high-quality property throughout the region.

CBRE’s ‘2015 APAC Real Estate Markets Outlook’ report reveals what trends are likely to characterise the office, retail, industrial and investment sectors in the Asia-Pacific region in the coming year. It states that rapid urbanisation, demographic growth, an expanding middle class and increasingly wealthy households will all contribute to the Asia-Pacific region’s higher-than-average economic growth. It forecasts that there will be increasing demand for quality suburban retail malls and residential housing in the region.

The CBRE report cites a finding from Oxford Economics that the Asia-Pacific will experience growth of 4.4 per cent in 2015 compared with 2.9 per cent globally.

Dr Henry Chin, head of Research, CBRE Asia-Pacific, says investment growth in the region is a result of several factors: newly raised private equity real estate funds; an increase in institutional investors’ allocations to the Asia-Pacific; growing activity by Asian institutional investors; and adequate debt financing.

Office rents in the region are expected to continue to record steady growth, driven largely by Tokyo, Singapore and Bangalore. However, growth is expected to be 3.2 per cent, down from 3.6 per cent.

Corporates will continue to be influenced by cost control, resulting in cautious expansion across the region,” says CBRE. “Focusing on long-term portfolio strategy and workplace improvement, companies are willing to consider opportunistic upgrades and activity-based workplaces.”

Growth in rents is also expected in the retail sector, but it will ease from 5.4 per cent to 2.4 per cent. Tokyo, Beijing and Shanghai are all expected to be the top performers. Retailers in the region are expected to focus on leasing prime space in key growth markets.

In the industrial sector, this year will see stronger logistic rents as a result of strong demand, particularly in Hong Kong, Osaka and Shanghai. The rental growth forecast for industrial is 2.9 per cent.

Overall, the report forecasts diverging growth in the region, with Japan at the start of an upward cycle on the back of the depreciation of the yen. China’s economic growth, however, is slowing and will continue to slow by the end of the decade. In spite of this, China will remain the main focus of corporate expansion in 2015.

To download the report click here.

Total commercial real estate investment turnover in the Asia-Pacific

^{US$10 million and above, office, retail, industrial, hotel and mixed-use properties only}

^{Source: CBRE Research, January 2015}