Technology and diversity key drivers of change in 2015

Technology and diversity key drivers of change in 2015Colliers International has released its ‘Asia Pacific Property Outlook 2015’ report, which predicts that property markets across the Asia-Pacific will experience continued increases in investment volumes, improved tenant demand and structural change across various sectors.According to the report, two key trends will have an impact on the property industry in the coming year: the influence of technology; and investors continuing to diversify from core assets to other markets and sectors.The way that technology is infiltrating the fabric of society is having a major effect on how the property industry does business, says Nerida Conisbee, Colliers International’s national director of research.”In 2014 there was a jump in the number of technology firms looking for office space across all our CBDs in Australia,” she says. “Similarly, workplaces continue to evolve and change as technology makes us more mobile. An explosion in the amount of data is starting to change the way we interact with buildings and allows owners to optimise building performance.”Big data is starting to facilitate a better understanding of what kinds of spaces work best in terms of tenant health and energy efficiency. This is also expanding to whole cities, with detailed monitoring of traffic volumes and crime levels starting to make cities more efficient, safer and cleaner places to live.”The report also suggests that investors will increasingly move to target non-core assets as competition for core assets intensifies and investors search for higher yields.”In 2014 we did start to see a small group of investors begin to move away from core assets and towards markets and sectors that are higher yielding or have development potential,” says Conisbee. “The most obvious of these were a large number of Asian developers buying secondary CBD office buildings in Melbourne and Sydney to convert or redevelop for residential purposes. This resulted in some yield compression in both cities.”Positive signs also began to emerge in 2014 in the occupier markets, resulting in a more optimistic outlook for the coming year. John Kenny, Colliers International’s CEO – Australia and New Zealand, says, “We are seeing improving signs in the occupier markets in both Australia and throughout Asia. Although vacancy rates continued to rise and incentives stayed at high levels in 2014, tenant enquiry began to increase, with the Sydney CBD showing the biggest jump in Australia.”He said the year just gone could be summarised as one in which investment in property continued to accelerate, NSW returned as a growth economy, and the market saw signs that leasing demand was on the return.In terms of what to expect for the coming year, Kenny predicts “more of the same”, with investment volumes likely to continue to rise and tenant demand continuing to improve.The rise of China as a major source of outbound capital, targeting all regions across the Asia-Pacific, is another trend that will have an impact next year.”There is pent-up underlying demand from investors, primarily due to the lack of stock, and that will gradually be satisfied,” says Dennis Yeo, Colliers International’s CEO – Asia. “However, there are increasing challenges for investors looking overseas, not least the narrowing of the gap between yields in Asia and in overseas markets.”For more on the Colliers International report visit: http://www.colliers.com.au/2015-Property-Outlook