CBRE’s Asia Pacific investor survey found that 60% of investors intend to purchase more real estate in 2021, the highest level since 2016
Logistics claims the top spot for most popular sector for the first time, as the pandemic boosts demand for industrial and logistics property
Another popular sector is cold storage, demand for which has increased due to rising requirements from occupiers selling groceries online and pharmaceutical products
Ho Chi Minh City has entered the top five preferred markets for the first time, as the diversification of supply chains is making industrial and logistics assets highly attractive
Logistics is the most preferred sector for real estate investment in Asia-Pacific as investors retain an optimistic view towards the future of office leasing demand in Asia Pacific, according to the results of a new survey by Coldwell Banker Richard Ellis (CBRE).
CBRE’s Asia Pacific Investor Intentions Survey 2021 found that 60% of investors intend to purchase more real estate in 2021, the highest level since 2016.
While some investors may be compensating for inactivity in 2020, the findings reflect a broad improvement in market sentiment in the first half 2020, supported more recently by the launch of vaccination programs in several markets, said CBRE, the largest commercial real estate services company in the world.
Logistics has surpassed office as the most popular sector, the first time it has claimed top spot since the surveys began, as the pandemic boosted demand for industrial and logistics property over the course of 2020.
Robust demand for logistics assets is also reflected in investors’ pricing expectations: 23% of investors, mainly long-term institutional buyers, stated they were willing to bid above asking prices.
Meanwhile, data centers and cold storage were named the most popular alternatives. Data centers were the subject of stronger interest in this year’s survey as a surge in demand for video conferencing and other platforms to support remote working led to increasing requirements for data storage. Transaction volume in the sector reached US$2 billion in 2020, the highest annual total in five years.
The second most popular sector was cold storage, demand for which increased substantially over the course of 2020 due to rising requirements from occupiers selling groceries online and pharmaceutical products.
The survey also noted growing interest in healthcare as more investors are seeking pharmaceutical-orientated business parks and R&D laboratories.
With Asia containing the pandemic relatively well compared to North America and Europe, more investors identified markets within the region as their preferred choice for investment this year. The fact that Asia is home to markets and dynamics with which most respondents are more familiar is also likely to have influenced investors’ strategies, said the report.
On preferred markets, Tokyo remains the most attractive city for cross-border investors. The city has ranked in the top three most popular destinations since 2018 owing to its availability of high-quality assets and strong liquidity.
Singapore ranked second. The city-state remains an important hub for foreign corporations looking to access Southeast Asia and is also emerging as a viable alternative to Hong Kong among companies establishing Asia-Pacific headquarters.
Korea’s robust domestic investment market propelled Seoul into the top three destinations for the first time. Local institutional investors remain highly acquisitive, while domestic and foreign buyers retain a strong appetite for modern logistics properties in Greater Seoul.
Notably, Ho Chi Minh City entered the top five for the first time. With the diversification of supply chains encouraging more manufacturing investment, industrial and logistics assets are keenly sought after.
While Hong Kong fell out of the top 10 markets for the first time, Shenzhen (no. 7) is one of the new entrants to the survey. Others in the top 10 include Shanghai (no. 4), Beijing (no. 6), Sydney (no. 8), Osaka (no. 9) and Melbourne (no. 10).
The survey also found that investors have a clear preference for core and opportunistic/distressed opportunities.
Looking ahead, CBRE expects investment volume to increase by 5% to 10% year-on-year in 2021.
CBRE’s Asia Pacific Investor Intentions Survey 2021 was conducted between November 9, 2020 and December 14, 2020. Some 492 mainly Asia Pacific-based investors participated in the survey, which asked respondents a range of questions regarding their buying appetite and preferred strategies, sectors and markets for 2021.