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Commercial Real Estate Investment To Moderate, CBRE Forecasts

By on Mar 04, 2016 in Featured, Property News

The Asia-Pacific investment market will continue to see strong demand for real-estate commingled funds, according to CBRE’s “2016 APAC Real Estate Markets Outlook”.

Dr Henry Chin, head of research at CBRE Asia-Pacific, said the region would enter a period of slower growth in the commercial real-estate market. Activity is likely to moderate over the course of the year as it becomes more challenging to source investable stock able to meet investors’ target returns.

Interest rates will remain low in 2016, so yields are largely to remain stable across the region. However, CBRE expects to see a mild yield expansion in 2017 together with a rise in interest rates.

The economic slowdown in China – as well as higher US interest rates, and currency volatility – will also remain a key concern for investors, given the scale of its impact across the whole region. However, macro trends of urbanisation and the rise of the middle class remain largely unchanged and will continue to drive growth across Asia and the 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. Demographic changes will create opportunities in niche sectors such as self-storage facilities, senior and student housing, and data centres,” Chin said.

Regionally, active markets will continue to be led by Australia and Japan, while India expects to see a positive year after the relaxation of FDI (foreign direct investment) 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 1 cities.

Overall, the long-term outlook remains positive for the region, he said.

In the office market, Grade A rental growth in the Asia-Pacific region is forecast to weaken to 0.5 per cent in 2016 from 2.7 per cent in 2015.

Meanwhile, around 6 million square metres of new shopping-centre space is scheduled to be completed this year region-wide. Against sluggish leasing demand and ample new supply, overall retail rents are forecast to experience a mild correction of below 1 per cent.

Occupier demand for logistics space is expected to remain solid. Around 4.2 million square metres of new logistics supply is scheduled to be delivered in 2016; about 54 per cent of this will be in Greater Seoul, Singapore and Greater Tokyo.

Source: The Nation – 4 March 2016

Nora has been in the Corporate Communications arena for a number of years. Nora's role is to communicate all newsworthy items that are of a PR nature.

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