Dare to Adapt in a Fast-Changing World
Investors, tenants and landlords would be well advised to re-think their real estate strategies so they can adapt to a rapidly transforming environment, according to CBRE’s Asia Pacific Real Estate Market Outlook 2020, which was released last week. Asia Pacific’s commercial real estate market can be expected to experience profound structural shifts in the new year, as low interest rates, evolving end-user preferences and technological innovation reshape the competitive landscape.
“The “Phase-One” trade agreement signed by the U.S. and China earlier this month should provide a welcome boost for the global economy in 2020. While we expect Asia Pacific’s real estate market to remain resilient, the sector will face challenges from de-globalization, disinflation and demographics. Ongoing geopolitical tensions will continue to impact business activity around the region, while inflation is likely to remain subdued,” says Dr. Henry Chin, Head of Research for APAC/EMEA, CBRE.
CBRE forecasts stable demand and modest rental growth across office, retail and industrial sectors. Office demand is poised for a mild recovery, while ample new Grade A office supply will ensure that most markets continue to favor tenants. Demand for brick-and-mortar retail space should remain stable, although retailers will continue to adopt a prudent approach to their real estate footprints. Logistics market fundamentals appear solid and the ongoing shift towards omnichannel retail will drive steady leasing demand from retailers and third-party logistics firms.
“The real estate investment market should continue to enjoy ample liquidity in 2020, supported by low interest rates and a wider cap rate spread across all three sectors. Low returns from fixed income investments will encourage Asia Pacific institutional investors to diversify their portfolios into commercial real estate. Asia Pacific commercial real estate investment turnover is expected to remain solid,” notes Dr. Chin.