Investment activity in Asia Pacific will remain solid as steady economic growth, which will continue to outpace the rest of the world in 2016, continues to be recorded across the region, according to CBRE. However, it was also noted in CBRE’s 2016 APAC Real Estate Markets Outlook that activity will be limited by asset pricing and availability.
“The region’s investment market will continue to see strong demand from real estate commingled funds and institutional investors. Institutional investors will continue to invest in Asia Pacific to increase their exposure to real estate for strategic diversification,” Dr. Henry Chin, Head of Research, CBRE Asia Pacific, said in a press release. “That said, Asia Pacific will enter a period of slower growth in the commercial real estate market with activity likely to moderate over the course of the year. Interest rates will remain low in 2016 so yields are largely to remain stable across Asia Pacific. However, we are expecting to see a mild yield expansion in 2017 together with the rise in interest rates.”
Given the scale of its impact across the whole region, the economic slowdown in China will continue to loom large in the minds of investors. The report added that higher-than-expected US interest hike rates and currency volatility will also influence decision making. However, macro trends of urbanization and the rise of the middle class remain largely unchanged and will continue to drive growth across Asia Pacific in the medium to long-term.
“There are structural investment-themed opportunities for investors to focus on in 2016, such as the growth of e-commerce, regional tourism and demographic changes” Dr. Chin explained. “Demographic changes will create opportunities in niche sectors such as self-storage facilities, senior and student housing, and data centers.”
Cheaper rents, new supply and improvement to infrastructure will help spur the office markets in places like Beijing, Hong Kong and Shanghai. In retail property market, Australia, Japan, New Zealand and Southeast Asia all have positive outlooks.
“Regionally, active markets will continue to be led by Australia and Japan, whilst India expects to see a positive year following the relaxation of FDI norms at the end of last year. China will also remain on the radar for most international investors although demand will be largely confined to tier I cities. Overall, the long-term outlook remains positive for the region,” Dr. Chin concluded.
