Colliers (NASDAQ and TSX: CIGI), a leading diversified professional services and investment management firm, revealed that quality office assets in key metropolitan markets like London, New York, Tokyo and Sydney have retained their appeal and will be in high demand next year. Core and core-plus office space are the top global strategic choices, with 60% of investors listing these assets as their investment preference, while industrial and logistics (I&L) assets will be the most coveted.

Their appeal derives not only from the realization that demand for office space is here to stay, especially in cities supported by strong transport infrastructure and high amenity values, but also from the ease of deploying capital at large scale that office assets represent. Rising construction costs, seen by four in five investors (81%) as a problem, could limit new construction, renovations and modernization projects, boosting demand for quality existing office assets.

“Investment in the Indian property sector remained resilient despite the headwinds triggered by the pandemic, which negatively impacted the economy and business climate. For the nine months to September 2021, investments were recorded at $3.5 billion, almost 75% of the amount seen in 2020. Favorable one-off bundled deals have kept the investment momentum going in recent quarters. warehousing have become the main beneficiaries this year, garnering 36% of combined investment.While office will remain a dominant sector, investment in residential, industrial and warehousing is expected to strengthen in 2022, helped by strong business fundamentals Earnings visibility and stability, attractive valuations and identification of dark horses will underline investment philosophy in 2022,” said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.

An exceptional year for real estate investments in Asia-Pacific

Across Asia-Pacific (APAC), more and more investors are ready to implement their ambitious plans that have been delayed by COVID-19. Cross-border capital flows are also likely to return, as travel and business activities gradually resume.

Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India, added: “The pandemic has accelerated a number of structural trends and will bring lasting changes to the nature of real estate business in India. This presents several opportunities for investors looking to future-proof their portfolios or recalibrate their strategy towards growth sectors. This is already evident in the rapid investments allocated to residential, the growing development of data centers, industrial, office as well as the evolution of the life sciences sector. Further opportunities exist in identifying location trends based on changing consumption and working habits and can also provide investment strategies in new markets in India”.

Overall, I&L assets will be the most sought-after real estate assets in the region, with more than 20% of investors anticipating capital value gains of 10% to 20% in value-added I&L assets in 2022, supported by tailwinds and large-scale economic transformation.

Significant interest continues to surround core-plus office space, which remains a popular asset class for regional investors in Tier 1 cities like Singapore, Sydney and Tokyo. 63% of respondents said they plan to invest in these assets, up from 54% last year.
Multifamily/Built-to-Rent (BTR) properties are also an increasingly sought-after asset class, with investors targeting both foundation and development projects. In Japan, it is a well-established sector that has long attracted grassroots foreign capital, while in Australia, it is an emerging asset class with development opportunities.

Retail is for opportunists as specialty assets gain popularity Our survey shows that investors see significant potential for appreciation and reallocation in retail assets. About a third of investors considering retail allocations are targeting opportunistic investments (including change of use). Moreover, the hotel industry is also an opportunistic target, with 38% of investors turning to this sector. The hospitality and retail sectors offer good opportunities in cities with large domestic markets, such as Japan, Australia, and Korea.

Specialist assets, particularly data centres, life sciences and healthcare, are expected to help drive investment volumes in 2022, with student accommodation also set to return as Australia, the region’s main market, is open to international visitors.

“2021 has seen strong investor appetite for emerging asset classes such as data centers and life sciences. Global data management firms, developers and alternative asset managers have formed joint ventures /strategic platforms to develop and operate data centers in India.In addition, investments in retail and mixed-use assets have appeared on investors’ radar and have constituted almost a quarter of total investments in the nine months ending September 2021 as they continue to seek profitable and stabilized retail assets Drawing inspiration from the world and Asia-Pacific, green finance is set to gain momentum years to come as developers, asset owners and investors commit to sustainable development,” added Vimal Nadar, Senior Director and Head of Research. erche, India at Colliers.

ESG considerations are gaining importance for investors

The report also shows that ESG (environmental, social, governance) considerations remain prominent, with nearly three out of four investors surveyed globally integrating environmental factors into their strategies. This willingness to invest with intention is both a way to future-proof their assets and respond to stakeholder and societal pressures for them to respond to the climate crisis.

ESG has also become a priority in APAC, as it will soon be a priority in the office sector as governments and corporate tenants pressure landlords to improve their ratings.

The views and opinions expressed are not those of IIFL Securities, indiainfoline.com

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