Office & Retail Property Predictions For Asia Pacific In 2022
CBRE, leading international property consultants, foresees a record year for Asia Pacific commercial real estate investment in 2022, driven by steady economic growth and pent-up investor demand, according to the company’s 2022 Asia Pacific Real Estate Market Outlook. CBRE expects total investment volume this year to grow by at least 5% to more than US$150 billion, surpassing the previous pre-pandemic high of US$142 billion in 2017. Strong investment activity from close-ended real estate funds, real estate investment trusts and institutional investors, including many that paused acquisitions at the onset of the pandemic in 2020—are expected to drive the recovery. It is estimated that institutions in the region have up to US$500 billion in equity on their balance sheets awaiting deployment. Greg Hyland, Head of Capital Markets for Asia Pacific at CBRE believes that logistics assets remain keenly sought after by investors in 2022. “While demand for retail and hotel assets will experience some near-term impact from the emergence of the Omicron variant, these sectors will continue to attract interest from value investors who are positioning for a recovery.” Most offices in Asia Pacific markets have reopened or are in the process of welcoming employees back to office-based working. The Omicron variant is unlikely to substantially derail the recovery of office demand as companies gain more confidence in the return to the office and hybrid working. Initial reactions from North Asian companies indicate that most will continue working at the office, albeit with limits on occupancy or team rotation. CBRE expects 2022’s office leasing activity as measured by net absorption to increase by up to 10% y-o-y on the back of a rebound in expansionary demand. Grade A office rents are set to grow around 1.0% in 2022, with Singapore leading the growth at more than 10%. Flight-to-quality relocations and newer, greener buildings are expected to help Asia Pacific’s office market recover from its longest downward rental cycle in 20 years. Asia Pacific’s industrial and logistics sector is likely to see another strong year, buoyed by a solid regional economic outlook and improved global trade. Logistics rents are expected to grow for a 12th consecutive year across all major markets, led by Hong Kong, which is expected to benefit from trade growth when borders with mainland China re-open, as well as reduced supply availability. Supply pressure is expected to be uneven across the rest of the region. Greater Tokyo and Guangzhou leading the pipeline of new supply reaching the market this year. The emergence of the Omicron variant at the end of 2021 added fresh uncertainty to the retail market outlook. Prior to that, consumer footfall across the region had almost fully recovered to pre-pandemic levels, reflecting rising vaccination rates and easing restrictions on economic activity. CBRE retains its positive outlook for the asset class in 2022 as more markets return to growth, despite the delayed recovery of tourist-oriented retail. Regional retail rents are forecast to grow mildly with demand focused on good quality assets in prime locations in a tenant-favored market.
Tags : Office & Retail Property Predictions Asia Pacific In 2022 Greg Hyland Head of Capital Markets for Asia Pacific at CBRE