MANILA, Philippines — Property markets in Asia Pacific are expected to start their recovery by the middle of the year, driven by investor appetite for assets with income stability.
In a report, Jones Lang Lasalle said it also maintains its forecast of a subdued real estate market for the Philippines in the early part of the year, with recovery beginning in the middle to late in the year.
“We can expect market practices that were adopted under the pandemic such as focus on safety and wellbeing, technology adoption and digitalization, and flexible work arrangements to become part of the norm,” JLL Philippines head of research and consultancy Janlo de los Reyes said.
“Logistics, data centers, tech and security companies, as well as the REIT market are the potential growth areas for the real estate industry,” he said.
JLL said it expects Asia Pacific real estate investment volumes to rebound by 15 to 20 percent this year, driven by demand for assets with stable income.
The global real estate consultancy firm sees increased investor interest this year in logistics and so-called alternative assets such as data centers and multi-family or residential rental properties.
In addition, hotel, retail and office investments will also gain pace in 2021 as pipelines rebuild, investors employ calculated deployment strategies, and the region’s projected economic recovery gathers momentum.
“The events of this year will position 2021 as the beginning of a new real estate cycle in Asia Pacific. Shifts in both investor appetite for core and alternative assets, coupled with occupier demand for spaces that align with a more sustainable and experience-driven environment, will become a more important strategic priority in the post-COVID world and a cornerstone of the market’s ongoing recovery,” JLL Asia Pacific chief executive officer Anthony Couse said.
Despite the pandemic-induced shift to home working last year, JLL said it remains confident that occupying office space remains an integral part of most companies’ future strategies, which means investors would continue to view this asset class favorably.
This is based on a third quarter 2020 JLL poll of Asia Pacific corporate real estate leaders, of which 94 percent said they were expecting to either retain or increase the amount of higher quality spaces in their portfolio.
However, in response to the changes precipitated by COVID-19, JLL said offices would be reimagined to support employee health and well-being, to enable social distancing, and to offer more collaboration space.
“JLL expects declines in leasing volumes to stabilize in 2021 to end up flat on 2020 levels,” the property consultancy said.
Meanwhile, JLL said entering an expected low return and low interest rate environment would further accentuate the attractiveness of high yield and low growth assets.
“Investors are likely to focus more on cash yields, for which logistics should outperform offices in most markets in Asia Pacific,” JLL said.
It added that the growth in multi-family and build-to-rent investments would also gain pace in 2021, driven by a new generation of renters, supportive government policy changes, and low interest rates that now undercut residential yields in many Asia Pacific cities.
“The rebound in transactions in the latter parts of this year will accelerate in 2021 as investors reaffirm their commitment to increasing exposures to Asia Pacific real estate. Longer term, the investment outlook remains incredibly positive given the expectation for continued low interest rates, huge amounts of dry powder and the insatiable hunt for yield,” JLL Asia Pacific CEO for capital markets Stuart Crow said.
Moreover, JLL emphasized that the reimagining of outmoded assets and outdated spaces across all sectors is likely to become a theme in 2021.
It estimates that 40 percent of today’s office assets (Grade A assets over 10 years old with no recent refurbishment) need some form of enhancement or renovation to stay relevant, which is likely to increase investors’ appetite for value-added investments in tandem with opportunities to reconfigure real estate to meet changing needs arising from e-commerce, health and safety, and remote working.
“If 2020 was the year that changed everything, 2021 may be the year where change becomes the new standard. The new year may not shake off all the challenges of a pandemic-hit economy, but with recovery in many markets and new dynamics influencing how people work, live and play, 2021 could establish itself as a year where Asia Pacific enters a new cycle of real estate growth, innovation and investment,” Couse said.
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Article and Photo originally posted by Philippine Star last January 14, 2021 12:00am and written by Catherine Talavera. Minor edits have been made by REBPH to cater to its own readers.
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