Investment in Asia-Pacific real estate hit US$125 billion (S$169 billion) in the first nine months this year, up 10 per cent year on year, with a strong 2020 forecast.
Mr Stuart Crow, JLL’s chief executive officer of capital markets in Asia-Pacific, said: “Over the next two years, we expect… Asia-Pacific to outperform Europe and the Americas with an outsized portion of global investor interest.”
JLL said foreign investments in Asia-Pacific real estate are at a decade-high, making up 35 per cent of total volumes this year, mostly driven by private equity funds and large-scale transactions.
“Real estate in Asia-Pacific has gained favour… as investors continue to seek high yields and stability amid a climate of geopolitical uncertainty and slowing economic growth,” noted Mr Crow.
The real estate consultancy expects a stronger investor appetite for logistics next year, which means facilities will be held tightly, prompting investors to become more creative to access quality assets.
With Asia-Pacific real estate investment trusts (Reits) having raised a record US$14 billion this year, JLL predicts that Singapore and India will see more initial public offerings from Reits next year, mainly driven by their focused growth strategies and consistent trading performance.
“Reits are likely to continue their strong trading performance and be highly competitive buyers of real estate assets. Size matters and we can expect to see more consolidation in this sector,” said Mr Crow.
JLL also noted investment opportunities in the green building sector next year, given the advent of sustainable technologies to reduce operating costs and innovative design to attract more occupants.
Mainboard-listed Keppel Reit announced on Dec 4 that it has obtained a green loan facility from OCBC Bank to grow its green building portfolio.
“We believe governments in this region are sustainability conscious and proactive in transforming their cities to make them smarter and more liveable,” said Mr Crow.
“These initiatives present opportunities for astute investors, either by acquiring or developing sustainable assets, or being a part of the city redevelopment process.”
Beijing has restricted the size of commercial developments in its central area and aims to reduce the population in its six central districts by 15 per cent from 2014 levels, according to JLL.
Similarly, Singapore has stepped up sustainability efforts with the decentralisation of its Central Business District, which encourages redeveloping older office buildings into mixed-use integrated developments and reducing the use of private transport.
Technology firms, particularly online platforms, are playing a greater role in driving up rents for premium offices than the traditional banking and financial services industry.
This is especially so in innovation-rich cities like Beijing, Singapore and Tokyo, which have advanced innovation ecosystems supported by a highly skilled workforce.
“Beijing’s office market will become a hot spot for investors next year as it has a strong talent pool supported by a deep-rooted innovation ecosystem,” noted Mr Crow.
“It has nurtured the most unicorns outside of Silicon Valley and is the third-largest destination for venture capital funding.”
Flex spaces, which give companies the freedom to decide how much space to lease for how long, are likely to expand in key cities such as Singapore, Tokyo and Sydney, where demand continues to be high and there is room for more co-working operators and serviced offices to grow, said JLL.
Mr Crow added: “Landlords and developers are likely to maintain their partnerships with co-working operators or serviced offices, and some will create their own flex space offerings to keep up with tenants’ changing needs.”
Globally, flex space has been projected to grow further.
A separate JLL survey of 560 corporate real estate firms found last year that collaborative and agile workspaces are expected to increase from 19 per cent last year to around 30 per cent of the global corporate commercial property portfolio by next year.
Source: Straits Times News