Real estate investment in the Asia Pacific region should remain robust in 2018, with Tokyo, Melbourne and Singapore the top destinations for Asia Pacific investors, according to CBRE’s just released Asia Pacific Investor Intentions Survey 2018.
The report, which analyzes the outlook and appetite of the region’s real estate investors, indicates Asia Pacific investors are less concerned about global and regional economic shocks — for the second consecutive year — and more concerned about property prices amid intense competition for prime assets in the region.
High prices for prime core assets continue to move investors higher on the risk curve toward a core-plus strategy — such as investing in prime assets in noncore areas or nonprime assets in core areas — as well as a value-added strategy. In fact, 34 percent of respondents in the 2018 survey chose “value-added” as their preferred investment strategy, the first time this strategy has overtaken a core strategy in the five years the survey has been conducted. “Prime or core assets” are preferred by 30 percent of the participants, while “core-plus/good secondary” are preferred by 22 percent and “opportunistic/distressed assets,” 15 percent.
Return expectations among strategies are also narrowing for investors, with unleveraged returns for core/core-plus expected to be between 3 percent–6 percent, value-added, 6 percent–9 percent, and opportunistic, 6percent–12 percent.
Other trends include a thematic sector focus,such as on the logistics sector because of e-commerce growth or the for-rent residential sector due to higher housing prices; growing interest in niche property; the rise in co-working space; and the potential slowdown of outbound Chinese investment.
