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Stay ahead of the curve with APREA’s exclusive monthly update tracking the performance of China REITs.
APREA C-REITs Roundup provides the latest info and developments in C-REITs. Available for APREA members only, this important resource is your key to navigating the landscape of C-REITs.
Asian Real Estate Securities continue to oscillate in 2024 as rates expectations drive performance of REITs, Developers, and Asian currencies. One positive note is that globally fund managers are said to be the most underweight the real estate sector they have been since 2009, a year when entering the sector delivered several consecutive years of strong absolute and relative performance. Despite increases in yields and hawkish comments from Fed officials, the corrections have been shallow and on low volumes. MSCI changes which resulted in the deletion of several Asian REITs from their index had been an overhang and that was removed at month-end, enabling us to potentially see some improvements after well-flagged deletions led to underperformance as passive funds were sellers. We added to positions that were impacted as a result of these changes. Sentiment in the near term will likely be dictated by US employment data to be released at the end of the first week of June. Last month’s report showed an increase in the unemployment rate so any continuation of this trend may shift rate expectations yet again which would be positive for Asian REITs and currencies. Large discretionary consumer companies in the US have noted that lower-income consumers have been notably weaker, possibly as pandemic savings have been run down and higher costs crimp disposable income. Results and guidance behind us, the drivers for REITs and Developers are likely to be macro, but we could also start to see some uptick in corporate activity and buyback announcements.
The US Central Bank has lowered interest rates by half a percent for the first time in four years. Some markets across the Asia Pacific region have followed suit or are planning to do so in the coming quarter.
In Q3 2024, the office sector experienced the most movements in cap rates in the region, with 8 out of 18 cities covered in this report reporting changes.
Key Highlights in Q3 2024
Office sector
Retail sector
Industrial sector
The Inclusive Cities Barometer evaluates the inclusiveness of 44 EMEA cities and 35 APAC cities, based on just under 9,000 data points, 110 metrics across 4 dimensions and 12 subdimensions.
The cities represented in the Barometer are at varying stages of their journey towards more inclusive and vibrant urban environments. Instead of ranking cities by performance, our Barometer measures their progress relative to these starting points, highlighting exemplary successes and providing actionable roadmap for improvement.
Through the Inclusive Cities Barometer, we aim to guide and inspire real estate industry stakeholders towards creating more inclusive and socially sustainable urban environments. Access the hub to find out:
CBRE’s latest leasing market sentiment index reveals that leasing sentiment in most major Asia Pacific markets cooled but stayed in positive territory:
Please find below the rebalancing results (effective 24 June 2024 start of trading) for the:
GPR/APREA Investable 100 Index
INCLUSIONS
| CHN | Shimao Group Holdings Ltd |
| JPN | Mitsubishi Estate Logistics REIT Investment Corporation |
| MYS | UEM Sunrise Bhd |
| TWN | Cathay Real Estate Development Co Ltd |
| TWN | Huaku Development Co Ltd |
| TWN | Kindom Development Co Ltd |
| TWN | Yungshin Construction & Development Co |
EXCLUSIONS
| AUS | Charter Hall Long WALE REIT |
| CHN | Agile Group Holdings Limited |
| CHN | KWG Group Holding Limited |
| CHN | Powerlong Real Estate Holdings Limited |
| JPN | Japan Logistics Fund |
| THA | AP Thailand PCL |
GPR/APREA Investable REIT 100 Index
INCLUSIONS
| AUS | Charter Hall Group |
| IND | Embassy Office Parks REIT |
| JPN | Tosei REIT Investment Corporation |
EXCLUSIONS
| CHN | Yuexiu REIT |
| JPN | Sankei Real Estate Inc. |
| THA | CPN Retail Growth Leasehold REIT |
GPR/APREA Composite Index
INCLUSIONS
| AUS | AVJennings Ltd |
| IDN | PT Maha Properti Indonesia Tbk |
| MYS | Consolidated Bhd |
| TWN | We & Win Development Co Ltd |
EXCLUSIONS
None
With the Asia Pacific commercial real estate market sitting at the top of the interest rate hike cycle, attention continues to focus upon the sizable volume of outstanding senior loans due to mature; a situation which could lead to a substantial funding gap in the coming years.
CBRE estimates that there is US$257 billion of outstanding senior commercial real estate debt in Asia Pacific, leading to a projected funding gap of US$8.4 billion between 2024-2026.
CBRE expects a funding gap to arise in markets where there is still some degree of capital value decline expected over the next three years. By total volume, Australia will have the biggest funding gap (US$4.6 bln) between 2024-26, followed by mainland China (US$2.9 bln).
The gap will be highly concentrated in the office sector, with CBRE expecting some further repricing over the remainder of 2024.
This report explores the commercial real estate debt market in Asia Pacific and the factors underpinning the debt funding gap in the region, including the markets and sectors that are likely to face the biggest gap, and implications for investors.
This report was originally published in https://www.cbre.com/insights/reports/the-debt-funding-gap-for-asia-pacific-real-estate/
This report, published in collaboration with Oliver Wyman, highlights the pivotal role of cities in leading the global fight against climate change and biodiversity loss. Coordinated city action for nature is not only vital to achieving the goals set by the Global Biodiversity Framework (GBF), but also strategically necessary given the climate-, health- and infrastructure-related urban challenges arising from existing unbalanced relationships with nature and the biosphere.
This report was originally published in https://www.weforum.org/publications/nature-positive-cities-guidelines-for-rehabilitating-nature-in-the-urban-era/
ESG reporting has brought the conversation on “Net Zero” from the halls of multilateral organisations to corporate boardrooms across the world. Over the past decade, companies have been looking to better their ESG records. In India, since 2023, the Securities and Exchange Board of India (SEBI) has mandated the top 1000 listed companies (by market capitalisation) to file a business responsibility and sustainability report (BRSR) that discloses environmental data including energy, emissions, water, and waste. Starting from financial year 2024-2025 ESG disclosures are also applicable for the value chains of the top 250 listed entities (by market capitalisation) on a comply-or-explain basis.
Large corporations can look to cooling systems in their building infrastructure and operations to improve ESG performance across BRSR-defined KPIs of water & energy footprint, associated GHG emissions, circularity of resources, in addition to other social- economic parameters. In India, the buildings’ sector (residential and commercial) is responsible for 33% of total electricity consumption, projected to increase to 55% demand of total electricity generated by 2047. The building and construction sector also accounts for 32% of the total national GHG emissions inventory. Of a building’s total demand for energy, 57% is towards cooling requirements alone. As per the 2023 World Energy Outlook of the International Energy Agency (IEA), India experienced a 21% increase in electricity consumption from space cooling between 2019 and 2022. Being a developing and a rapidly urbanizing country, India expects to see a 1.5-2x increase in area under building construction in 2027, as compared to 2017, which combined with heat generation and Urban Heat Islands (UHI) effect from vehicles, appliances (air conditioners, refrigerators, etc), and decline in tree cover will further increase the electricity demand for cooling.
Businesses, especially those with large campus requirements, have the capacity to, on one hand, adopt innovative building design that incorporates passive measures to reduce the upfront cooling demand on a square metre basis. On the other, they are also well positioned to adopt disruptive cooling technologies such as district cooling/cooling as a service (CAAS) to meet residual cooling demand in a sustainable manner. Tabreed has demonstrated success across several ESG metrics in its existing projects through the Cooling as a Service model. For instance, at Tata Realty’s Intellion Park in Gurugram, Haryana, cooling system designed, built and operated by Tabreed, is able to serve 700 sft of area per ton of cooling to achieve an energy performance index of 70-90 kWh/m2/year.
District cooling also allow for integrated solutions that can help achieve ESG requirements beyond energy. For example, district cooling plants can utilize grey water from on-site Sewage Treatment Plants (STP) which is generally discharged straight into rivers and lakes. Similarly, district energy integrated with waste to energy plants & city gas distribution plants can first, allow utilization of waste heat for cooling, second, reduce grid power requirement, and third, replace highly polluting Diesel Generator (DG) sets in case of grid failures by creating redundancy. The possibilities for using district energy as a means to achieve integrated solutions that improve resource efficiency from a systems’ lens are limitless. There is an opportunity here for businesses to not only become more sustainable & cost effective, but truly move the needle on energy and resource efficiency for the country.
Managing Director, Tabreed Asia
Country Manager, India, Tabreed
The Real Estate Sentiment Index is developed jointly by Knight Frank India and the National Real Estate Development Council (NAREDCO). The objective is to capture the perceptions and expectations of industry players to gauge the sentiment of the real estate market.
The Sentiment Index Q1 2024 highlights a decadal high, indicating heightened market confidence in real estate’s supply side, fueled by India’s strong economic landscape.
Kemmu Kawai joined Longevity Partners Japan in September 2022 as the Country Director. Based in Tokyo, he oversees all operations and activities in Japan, the Asia-Pacific region and beyond. He brings him more than 16 years of experience in finance where he specialised in real estate and credit investments. Before joining Longevity Partners, he served as a Portfolio Manager at Norinchukin Bank and as Investment Manager at Center Point Development.
Kemmu Kawai
Managing Director
Longevity Partners
