According to the latest Emerging Trends in Real Estate Global Outlook by PwC and the Urban Land Institute (ULI), published on March 12, low yields and sluggish transaction volumes were among the top concerns for property investors in the Asia Pacific (APAC) region this year.
The report gathered investor sentiment from global asset managers, including Blackstone in the US, Savills Investment Management in the UK, and CBRE Investment Management. More than 70% of respondents pointed out low yields, persistently high interest rates, and geopolitical tensions as the main concerns for investors.
The report also highlighted that industry leaders are still drawn to APAC as a diversification strategy due to its population growth and other demographic metrics, as well as its differing monetary policies, such as Japan’s plan to raise short-term interest rates.
Despite real estate transactions in the region growing by 13% year-on-year to US$173.5 billion (S$231.3 billion) last year, surpassing the growth in other regions such as Europe (12% year-on-year) and the Americas (11% year-on-year), transaction volumes in APAC are expected to remain sluggish as Europe and North America begin a new capital markets cycle with volumes set to improve further.
Liquidity in APAC was affected by a drop in transaction volume last year. In China, transactions decreased by 25% year-on-year to US$418.3 billion (S$557.6 billion), while Hong Kong saw a 1% year-on-year dip to US$15.7 billion (S$20.9 billion).
On the other hand, asset managers in Europe are grappling with a different set of concerns. The top three areas of concern in the region for investors include international political instability (85%), a further escalation of the war (83%), and Europe’s economic growth (77%).
Data from MSCI, a leading US-based research and data analytics company, also show that US commercial property prices remained stable last year, ending the year down by only 0.7%. This could mean that investors may shift their focus and capital to these regions in the coming months.
The report also revealed that data centre assets hold the highest potential for investment and development in all three regions in 2025. According to New York-based research firm Green Street, the global demand for data centres reached record levels last year, with asking rents growing at a double-digit pace. In its latest research, MSCI also highlights 2024 as a standout year for this asset class, with acquisitions of existing data centres through single-property and portfolio deals increasing by more than 60% in the US.
In September last year, Blackstone and the Canada Pension Plan Investment Board (CPP) acquired data centre firm AirTrunk from Macquarie Asset Management and the Public Sector Pension Investment Board for over US$16 billion (S$21.3 billion). This was the largest commercial real estate deal recorded in APAC and globally for 2024.
Other related developments include:
– Hilton has set the target of more than 1,000 hotels by 2025
– APAC hotel investments saw a 33% year-on-year increase in the first half of 2022, according to JLL
– ERA Realty has launched its APAC headquarters in Singapore
Investing in real estate is a strategic decision, and location plays a vital role in its success, particularly in the bustling city-state of Singapore. The value of condos is directly influenced by their location, with those in central areas or near important amenities like schools, shopping centers, and transportation hubs experiencing the most significant appreciation. For instance, prestigious areas like Orchard Road, Marina Bay, and the Central Business District (CBD) have seen continual growth in property prices. Families looking to invest in condos also prioritize proximity to top-rated schools and educational institutions found in these sought-after locations, further cementing their investment potential. Additionally, with the introduction of Singapore Projects, these prime areas are expected to see even more growth in their real estate markets.