Volumes are sharply lower in Asia this year, but real estate investors still have the resources and the appetite to do deals, delegates heard at the ‘Update Asia: Cross-Border Investment Trends, Capital and Opportunities’ briefing which took place at RealX Global, the first online trade fair organised by Real Asset Media.
‘We have seen a drop of 39% in investment volumes this year because of the pandemic,’ said Terence Tang, managing director, capital markets and investment services Asia, Colliers International. ‘But we also see a lot of institutions putting more money into real estate and taking the opportunity to increase their allocations’.
The slowdown has led to a pause, but there is a lot of capital ready to be invested.
‘The capitalisation of the industry is very solid,’ said Alan Dalgleish, managing director, Asian Property Intelligence. ‘This 2020 crisis has meant dislocation but it has also brought opportunities’.
All markets are not equal
The slowdown has not affected all markets equally, he said: ‘The top five markets, that offer depth and a lot of options to investors, are still doing well. Some cities like Seoul, Sydney and Tokyo have seen substantial volumes’.
Some sectors have also flourished during the crisis at the expense of others.
‘Logistics and science parks have been in real demand because they are seen as resilient’, said Natalie Breen, partner, global real estate legal leader, PwC.
‘There has been unprecedented demand for last-mile logistics assets and data centres across all markets, to the point that there’s almost a worry about oversupply,’ said Tang.
There is a question mark over offices, as the uncertainty over future working practices makes investment committees reluctant to commit.
‘Logistics and data centres are easy to sell now, but committees have doubts about what the demand for offices is going to be in the future, and also what kinds of assets and locations, whether CBD, suburban or business parks,’ said Tang.
Only prime assets are seen as safe and many investors are waiting for more clarity before making a commitment.
‘We think it’s good to take a longer-term view and we believe that offices will be in demand again’, said Tang. ‘They will become collaboration and brainstorming points, with more conference rooms, moveable walls and modular furniture, and an emphasis on flexibility, well-being, green leases and ESG criteria’.