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Titled “Champion our Ecosystem”, Champion REIT’s Sustainability Report 2023 illustrates a collaborative endeavor that focuses on establishing a value-added network around stakeholders through sustainable performances in line with its 2030 ESG Targets and 2045 Net Zero Commitment.

The report is structured according to local and international regulations and frameworks, including Global Reporting Initiative (GRI) and Task Force on Climate-related Financial Disclosures (TCFD) with independent assurance. In its pursuit of higher standard of information transparency, the report further strengthens its climate-related information in accordance with the International Sustainability Standard Board’s (ISSB’s) IFRS S2 Climate-related Disclosures.

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Our latest issue of APREA TrendWatch examines the REIT landscape, focusing on insights from the APREA-SGX Global REIT Roundtable.

Ankur Gupta of Brookfield highlighted the resilience and importance of REITs in diversified global portfolios, emphasizing their strong fundamentals and ability to adapt to changing market conditions. He shared the evolution of REITs from niche assets to mainstream sectors, their low volatility, and their challenges, including competition from private funds and regulatory constraints.

We also explored regional perspectives, with Naoki Suzuki of KJR Management and Sanjeev Dasgupta of CapitaLand Investment (India) and CapitaLand India Trust discussing favorable investment climates in Japan and India, respectively, driven by strong rental growth and strategic investments in sectors like data centers and life sciences.

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Singapore is one of the few APAC markets with a full ‘end-to-end’ life sciences value chain that comprises manufacturing, R&D, sales & logistics. Bolstered by supportive government policies, biomedical manufacturing has been the fastest growing among various manufacturing sectors. Strong venture capital funding and a vibrant life sciences startup ecosystem has also accelerated R&D, which has led to stronger demand for labs and expansion of manufacturing production capacity.

To date, Singapore has cultivated life sciences growth through a network of vibrant and strategically located clusters, such as Biopolis, Singapore Science Park, Tuas Biomedical Park and Kallang, giving occupiers a wide variety of options.

Although life sciences properties ranked top among preferred alternative assets for investment, such investible stock remains limited in Singapore. This paper highlights various key strategies in which investors can access the growth of this sector.

This report was originally published in https://www.cbre.com.sg/insights/reports/life-sciences-real-estate-an-emerging-asset-class-in-singapore

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Office: A rise in site inspections and enquiries failed to translate to an increase in leasing activity in Q1 2024 due to occupiers’ cost cautious stance and the first quarter historically being a quiet period for transactions. Occupiers are likely to retain a cautious attitude towards spending and location selection in the near term.

Retail: Leasing was dominated by expansion, with upgrading and relocation also picking up. Demand was led by the luxury and F&B sectors. Although retailers continue to be location sensitive, markets with tight availability are seeing demand spill over to secondary areas.

Logistics: Demand moderated this quarter during what is a traditionally quiet period for transactions. Leasing activity was constricted by stricter capital expenditure controls due to moderating sales growth. 3PL occupiers continued to display steady demand, supported by cost optimisation and outsourcing.

Investment: Asia Pacific commercial real estate investment volume fell by 4% q-o-q to US$24 billion, primarily due to a decrease in industrial investment. Delays to much anticipated interest rate cuts prompted investors to stay on the sidelines, with most buyers opting to wait for additional repricing opportunities as the negative carry situation persists.

This report was originally published in https://www.cbre.com/insights/figures/asia-pacific-figures-q1-2024

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The real estate market in the Asia Pacific (APAC) region continues to exhibit robust growth on a global scale, despite the challenges posed by rising interest rates and housing crises in numerous countries. Significant technological progress in APAC economies has catalysed transformation within the real estate sector, with digitalisation and sustainability integration gaining momentum. These changes have also concurrently influenced the development of real estate projects within the region.

Globally, the real estate sector is increasingly embracing environment, social and governance (ESG)-driven innovations as a solution to issues such as escalating carbon emissions. This shift is evident in the updated real estate regulations within the APAC region for 4QFY24. Several APAC economies, including China, Hong Kong and Japan have implemented guidelines promoting green infrastructure and technology integration to confront this challenge.

Furthermore, commercial and industrial real estate is significantly rising in the APAC region despite constrained liquidity. In the housing segment, countries such as Australia, Singapore, China, India and Hong Kong have prioritised strategic reforms and regulations to address the housing demand. Notably, India and Singapore have initiated advancements within the retirement homes segment, catering to the needs of senior citizens seeking accommodation.

In spite of the prevailing challenges, APAC economies offer an attractive prospect for investors due to regulatory updates across various asset classes and types. These economies are predicted to play a pivotal role in channeling regional investments and fostering development in the forthcoming months.

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Out of the 19 markets covered in this Asia Pacific report, 11 experienced movements in cap rates in Q1 2024.

The Asian market remains stable, without any factors driving movements in cap rates. Australia and New Zealand have driven the changes in the region, with an increase in cap rates in all the surveyed cities, particularly in the office and industrial sectors.

Key Highlights in Q1 2024

Office sector

  • In Australia, after a 72% decrease in transaction volumes in 2023, the first quarter of 2024 has seen only a limited number of completed sales. Sales to date over Q1-24 have continued to indicate a softening of cap rates.
  • Bangkok’s office sector has experienced a slight increase in cap rates following a rise in select prime rental rates, despite limited movement in sales transactions.
  • Beijing’s office has seen a noticeable decline in demand, resulting in a city-wide vacancy rate reaching double-digit year-on-year growth, currently at 20.7%. The en bloc transaction is currently driven by end-user-occupiers who prioritize suitability and affordability over vacancy and rental performance of the property. Investors remain cautious due to concerns about oversupply and declining rent, resulting in higher expectation for cap rates.
  • Additional office supply in Jakarta is expected to enter the non-CBD areas, as many corporates are optimising existing office space instead of expanding or relocating. This is due to the adoption of a hybrid working model, which continues to put pressure on the rental rates and occupancy in CBD office spaces.
  • Shanghai’s Grade A office market is still struggling to attract leasing demand, leading to downward pressure on rent. The upcoming supply peak in 2024 is likely to further increase pressure on the leasing market, influencing investor’s confidence and driving up cap rates.

Retail sector

  • The Beijing retail sector has demonstrated stability and witnessed growth. This positive performance can be attributed to increased foot traffic and rising revenue in shopping malls, particularly during the Chinese New Year (CNY) holiday period in Q1. Shopping malls will need to remain at the forefront with distinctive features to attract consumers to achieve sustainability in the marketplace.
  • Hong Kong’s retail investment sector has been primarily driven by end-users and local investors, with cap rate remaining stable. Rental performance has generally remained healthy. Investors are still cautious about purchasing retail assets, being mindful of the vacancy rate.
  • The number of visitors to malls in Jakarta has grown by 15% to 20% compared to last year. Some existing brands are expanding their operations, and new brands have also entered the Indonesian market. Investors still remain cautions due to high competition from new malls entering the market.
  • Shanghai’s retail sector has also benefited from the robust tourism industry during the CNY holiday. Overall, sales and leasing demand performed well in Q1. The reflection of retail leasing activities and space uptake takes time to manifest in the investment market, resulting in largely flat cap rates during this quarter.

Industrial sector

  • Bangkok industrial saw upward movements in sales transactions for warehouse facilities and standard factory buildings. This was caused by strong foreign direct investment intended for large scale users of automotive supply parts (including electronic vehicles) as well as electronics. On the other hand, the rental market remained the same, with no major rental movements noticed.
  • Beijing’s industrial sector is currently influenced by end-user. Neighbouring cities such as Tianjing and Langfang have witnessed a decline in rental rates and an upturn in occupancy, which has had an adverse impact on the capital city’s industrial market. The intensified competition among cities to attract tenants has driven demand to shift away from the gateway cities and further weakened investor confidence in the industrial sector.
  • The industrial market in Hong Kong remains a high priority for many investors. Import (9.7%) and export (16.6%) figures were positive in the first two months of 2024, which helped keep the industrial market cap rate stable.
  • Stressed by the massive new logistics supply in Shanghai, investor prospectus continued to weaken in Q1, resulting in more cautious investment sentiment and higher industrial cap rates.
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CBRE professionals in Asia Pacific note that the timing for a recovery in investment activity has been pushed back amid limited risk appetite and delays to interest rate cuts. Nearly 70% of respondents expect a recovery from Q4 2024 onwards.

Cap rate expansion is expected across most markets in Asia Pacific, with cap rates in Australia to expand further, while Japan will remain stable. More pronounced expansions are expected in secondary assets over the next six months.

Other key highlights from the survey include:

  • Investors remain net sellers – particularly real estate funds, property companies and banks – but pressure is easing. Meanwhile, private investors continue to have strong net buying intentions.
  • The price gap between buyers and sellers is also narrowing across sectors, indicating stronger support for deal closure.
  • The survey reveals that in terms of investor preferences, flight-to-quality demand remains, while hotel and multifamily assets are gaining traction on cyclical and structural tailwinds.

CBRE believes that with interest rates having peaked in most Asia Pacific economies, investors should aim to complete acquisitions before rate cuts commence, with the optimal buying window expected to open in the second half of 2024.

This report was originally published in https://www.cbre.com/insights/figures/q1-2024-asia-pacific-cap-rate-survey

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Fractional ownership is a co-ownership framework wherein the retail investor can invest in smaller fractions of the property with relatively smaller amounts.

With Securities and Exchange Board of India (SEBI) formulating detailed guidelines for Small and Medium REITs (SM-REITs), a large number of erstwhile unregistered Fractional Ownership Platforms (FOPs) for real estate assets are expected to get listed as SM REITs. This will effectively have the potential to regularize underlying real estate assets to the tune of over INR 40 billion in the near to midterm.

Key highlights of the report include:

  • In the office market, strata sale form of fractional ownership constitute 28% of total Grade A stock with over 200 mn sq ft of Grade A strata sale stock across the top six cities.
  • Strata sale office stock in top six cities in India will swell to 260-270 mn sq ft in next two years, with an estimated market value of around INR 4,500 bn.
  • A well-regulated market of fractional ownership will attract investors across various asset classes and diversify in alternative asset classes like industrial & warehousing, data centres, retail etc.
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Business leaders are currently dealing with the crucial question – how can they effectively optimise resources, maximise savings and drive growth as they navigate a dynamic business landscape in 2024. Their challenges remain compounded by unprecedented inflation, fierce competition for talent, and the rising pressures of digitalisation and climate action.

Amid this scenario, offices today, albeit with much higher workforce flexibility, remain the epicentre of the work culture, with relocation decisions being underpinned by talent strategy and ESG goals. In Asia Pacific, a much greater pull to the office is creating higher occupancy than witnessed in other markets globally – causing the continued upward pressure on office rentals across the region.

In this edition of our Expert Insights | Asia Pacific Office Markets April 2024, we highlight six priorities to achieve cost savings in office real estate. We also present the Colliers Q1 2024 Office Market Research Reports from key Asia Pacific markets, unearthing actionable insights for real estate leaders.

Read the Report
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The Asia Pacific faces a critical need for infrastructure development due to rapid urbanisation and economic growth, necessitating substantial investments. Over the past decade, infrastructure investments have evolved, focusing on green initiatives and technological advancements. However, despite the availability of funds, challenges such as regulatory hurdles and financing constraints persist. To address these challenges, governments and stakeholders must collaborate to streamline processes, attract investments, and prioritise sustainability in infrastructure projects. By implementing innovative financing mechanisms and regulatory reforms, the region can bridge the infrastructure gap while advancing towards a greener, more progressive future.

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