Asia Pacific Real Estate Investment Volumes Forecast to Hit USD165 Billion in 2021 | Taiwan News
Growing volume of international capital hauling China’s logistics, commercial and data center facilities
HONG KONG SAR – Media OutReach – March 29, 2021 – Cushman & Wakefield (NYSE: CWK), a leading global real estate services company, recently released a report on The Signal Report: Investor’s Quarterly Guide to 2021 After the COVID-19 pandemic is likely to emerge the total investment volume for real estate (excluding development locations) in the Asia-Pacific region will recover to around USD 165 billion in 2021, which, according to Cushman & Wakefield, corresponds to around 90% of the 2019 level. This rebound in investment in the region is supported by greater investor confidence as the Asia-Pacific region leads the global economic recovery. The region is also benefiting from the positive momentum due to an increase in investments in the final quarter of 2020.
Property investors took a wait and see approach for most of 2020 as the pandemic broke out around the world and total investment volume (excluding development locations) declined nearly 29% globally over the year compared to the previous year. As the first region to be hit by the virus, the Asia-Pacific investment market took a hit in the first half of 2020, but momentum picked up in the fourth quarter of 2020, with China and South Korea leading the region in terms of investment activity.
Francis Li, Greater China International Director and Head of Capital Markets, Cushman & Wakefield, said, “With the country growing rapidly in high-tech and e-commerce, we are seeing a growing volume of international capital that is China’s logistics, commercial and business China’s office and retail sectors are also among the best performing markets in the world, benefiting from having the pandemic first. Although a relatively high level of new supply is due in the short term, we believe in the mid-market. to long-term growth prospects as the country continues to take the lead in infrastructure development, job creation and innovation. “
Global investment landscape
As in 2020, the global economy, the leasing markets and the capital markets will adapt to the pandemic situation this year, which will lead to a high degree of synchronicity between these different drivers of the real estate market. In contrast to the previous global recession, investment activity is expected to lead the leasing markets as global real estate markets recover due to the strong global financial position.
The global capital markets have operated under a yoke of uncertainty over the past year. 2021 promises to gradually reduce this weight. At this point in time, low base rates, high capital availability for debt and equity, and attractive valuations compared to other asset classes point to a far faster recovery than in previous downturns. In terms of property types, logistics and multi-family assets were the “pandemic winners” and will continue to be attractive investment bets around the world. However, the office and retail sectors will continue to offer investment opportunities as they evolve in accordance with changing work, life and shopping patterns.
Catherine Chen, Greater China Director and Head of Capital Markets Research, Cushman & Wakefield, said, “For core investments, we recommend office properties in China’s tier 1 cities and emerging technology cities like Hangzhou, and logistics centers in tier 1 and satellite cities: non-discretionary malls in retail – and premium quality in tier 1 and provincial capitals are also good choices for seasoned investors with solid wealth management skills. For value creation goals, urban renewal and remodeling projects are an important choice for mid to mid-term investors who have access to such opportunities and solid local ones Form partnerships. Finally, investors looking for opportunistic options can watch out for subpar and / or encumbered assets from over-leveraged developers and tourism to rebound after the pandemic in destinations like Hong Kong. “
Investments in Asia Pacific and Greater China
Across the Asia-Pacific region, investment activity in the region is expected to increase, although the pace of recovery will be different for different markets.
- Mainland China and Japan developed comparatively strongly in 2020, although the investment volume was relatively low. Combined with a strong performance in Q4 2020, they should be the first to recover to pre-COVID-19 levels.
- Mainland China is forecast to have the world’s highest real GDP growth of 8.7% among the 20 major economies in 2021. This bodes well for the CRE investment market, which is likely to continue to attract international capital.
- While Hong Kong saw a similar surge in the second half of 2020 and volumes are expected to surge in 2021, they are likely to remain muted compared to the $ 21 billion average over the 2015-19 period.
- South Korea had an impressive run in 2020 and recorded the highest annual investment volume since 2015. Robust investment activity in this market is expected to continue with total volumes around 2019 levels with some upside potential. India continued to perform well in 2020 and investment momentum is expected to continue as it attracts the attention of international investors.
- Singapore and Australia saw volume declines of 73% and 45% respectively in 2020, although 2019 was a particularly strong year for Singapore, exacerbating the 2020 annual decline. However, both markets showed renewed levels of activity towards the end of the year, suggesting a further upturn through 2021.
From a property-typical point of view, the following broad regional trends are expected to continue:
- Logistics will remain a key issue as e-commerce continues to flourish and supply chains evolve. The logistics and industrial sector in the Asia-Pacific region is showing strong growth and is also benefiting from its relatively low cost base and the growing working-age population. In mainland China in particular, e-commerce sales are expected to grow the fastest over the next five years, doubling from $ 863 billion in 2020 to $ 1.6 trillion in 2025.
- Data centers continue to offer enormous growth potential and benefit from the acceleration of cloud connectivity. With the rapid development of technology platforms and networks in many markets, the Asia-Pacific markets are expected to perform well as data center destinations.
- Offices will continue to be a sought-after investment property, especially in prime locations. As companies calculate the effects of remote working on their office use needs and enter into longer-term commitments, the office market is likely to gain some momentum in the second half of the year. Greater China is expected to continue to lead demand for office users in 2021 as the pandemic is effectively under control.
- Convenience / needity retail and locally popular target retail remain stable, as demonstrated so far during the pandemic. Experimental retail has been far more difficult due to pandemic restrictions, especially those retailers who rely on international travel, and so the recovery is expected to take longer.
Note: For more information on investors, see Cushman & Wakefield’s The Signal Report: Quarterly Guide for Investors through 2021.