Global Capital Markets: Insights and Outlook – Global Capital Flows (Colliers)
In Colliers’ latest report Global Capital Markets: Insights and Outlook – Global Capital Flows, Singapore tops the list of biggest global spenders so far in 2023 followed by the US. The Lion City, with cross border capital investments worth USD 21, 840 million in H12023, now represents around a quarter of the total investments and is three times bigger as a spender this year versus Canada in the third position.
Hong Kong and Japan stood out as the fourth and fifth largest source of cross-border capital, spending USD 6,508 million and USD 5,151 million respectively in the first half of this year.
The region came out equally strong as an investment destination. Japan, China, Australia and Singapore are among the top 10 investment destinations globally with healthy investment growth seen across each of these markets.
2023 Office Occupier Sentiment Survey: Global Summary (CBRE)
CBRE’s 2023 Global Occupier Sentiment Surveys feature insights from more than 400 corporate real estate executives across multi-national and domestic companies around the world. Their insights on the future of work have identified five trends that will guide global organizations as they optimize their portfolios:
People are using the office less frequently than they did prior to the pandemic, but attendance is continuing to rise.
Globally, the office remains a core element of corporate culture.
Focus on portfolio optimization means more than space downsizing.
Occupiers trade quantity for better quality space.
Occupiers seek more flexibility in lease terms and building services.
Survey results portend an increase in office attendance globally in the coming year, especially in markets where employee return has been lagging.
Artificial Intelligence: Real Estate Revolution or Evolution? (JLL)
Key findings
With new products like ChatGPT, AI’s potential to transform the global economy has captured the world’s imagination
AI has enormous potential to reshape real estate, with near and long-term impacts ranging from the emergence of new markets and asset types to innovations in investment and revenue models.
A rapidly expanding AI ecosystem and its supporting infrastructure will drive demand for real estate in different markets across the globe.
PropTech adoption has laid a solid foundation for AI integration in real estate. Organizations will need to consider how they can harness AI strategically and ethically, piloting applications before scaling to deliver value.
Japan’s resurgent real estate market – a haven for Singapore investors (Knight Frank)
Japan is the third most sought-after investment destination within APAC for Singapore-based investors, only trailing behind the Chinese Mainland and Australia.
Between 2013 and 2023, an estimated USD 16.2 billion has been injected into Japan’s commercial real estate (CRE) market. Significantly, 12% of this capital influx occurred in the first half of 2023, highlighting a pronounced surge in investor interest.
How have the Japanese government’s monetary policies impacted real estate investors?
The Japanese government’s monetary policies to stimulate domestic inflation have proven to be a significant advantage for real estate investors. This is particularly evident as the Japanese yen has recently touched multi-year lows compared to major global currencies. This trend has created a favorable environment for those in the real estate market.
Despite recent adjustments to its yield curve control targets, the yen’s depreciation against the Singapore dollar was unmistakably pronounced, hitting an unprecedented low in 2023. The added firepower has put Singapore as the top cross-border investor in Japanese real estate so far this year.
Retail in the Post-Pandemic Era: Trends and Opportunities (CBRE)
Following the lifting of pandemic control measures at the end of 2022, China’s consumer market has rebounded strongly. National total retail sales of consumer goods grew by 8.2% y-o-y in H1 2023, with the contribution rate of final consumption expenditure to economic growth reaching a record-high 77.2%. Domestic demand is now firmly established as the main engine of economic growth.
At the same time, the impact of COVID-19 on the consumption, lifestyles, and values of domestic residents is accelerating the emergence of structural trends that will have a far-reaching impact on the retail sector in areas ranging from store strategy to sustainable development. These trends will also influence demand for retail properties and asset management.
This report by CBRE identifies the main trends characterising China’s retail property market in the post-pandemic era and provides recommendations for retail occupiers, investors and developers preparing to navigate what will be a critical period for the cyclical recovery of China’s retail market and normalisation of domestic consumption.
Retail leasing demand in the world’s leading retail markets continues to rebound as economic activity recovers in the wake of the COVID-19 pandemic. The Tokyo retail market is no exception, with a resurgence in retailer demand having commenced in H2 2022.
In addition to existing retailers looking to increase their store numbers, several overseas brands have made their first ventures into the Japanese market. As was the case prior to the pandemic, Tokyo continues to be a preferred location for retailers seeking to establish or extend their store presence.
This report compares Tokyo with several of the world’s other major retail markets including New York, London, Paris, Milan, Shanghai, Hong Kong, and Singapore and explores the following factors that make Tokyo, and Japan as a whole, an attractive location for retailers to establish stores.
Tokyo: Rents are reasonable when compared to city GDP Japan: E-commerce ratio as a percentage of total retail sales is low Japan: Inbound tourist numbers and tourist consumption have demonstrated considerable scope for growth
Accelerating Positive Impact in the Real Estate Sector for a Net Zero Future
Companies around the world are stepping up on their efforts to decarbonise their business, and countries are setting national targets to reach net zero under the Paris Agreement. As APAC’s largest real asset manager powered by the New Economy and the third largest listed real estate investment manager globally, ESR Group Limited (“ESR” or “Group”) places top priority on its transition to become a net zero organisation.
Climate Emergency and the Era of Global Boiling
Recent climate events – extreme heatwaves and devastating floods – are occurring globally and this highlights the urgent need for concerted climate action. Instead of focusing on this urgency, some countries are shifting their focus to address energy security as a result of external headwinds such as economic recession, supply chain disruptions, and geopolitical tensions. The disparity between the current climate crisis and inadequate actions has resulted in global greenhouse gas (“GHG”) emissions reaching an all-time high this year. This prompted the United Nations to warn that the era of global warming has ended, and the era of global boiling has arrived. To address the catastrophic impacts of climate change, ESR believes that immediate decarbonisation actions must be taken to transit to a net zero future.
Net Zero in the Real Estate Sector
The built environment is responsible for almost 40% of global energy related GHG emissions and the real estate sector could contribute to a positive impact. Achieving net zero depends on a myriad of factors such as the type of asset class, location, and condition of buildings, with a fit for purpose strategy. In developing a decarbonisation strategy, real estate owners and managers should consider their building portfolios, regulatory requirements, and the market availability of low-carbon technologies and solutions.
At a basic level, real estate companies should reduce their Scope 1 and 2 operational GHG emissions, which are normally associated with energy use from direct and indirect sources (e.g., on-site fuels and grid electricity). Specifically for developers and owners, GHG emissions across their value chain such as embodied carbon should also be considered. This includes tackling other forms of Scope 3 GHG emissions throughout the life cycle of a building (i.e., from design, construction, operation to demolition) and addressing tenants’ energy consumption within the portfolio.
After establishing the boundaries and sources of GHG emissions, companies should set realistic targets which are aligned to global standards such as SBTi , WorldGBC or RE100. However, companies must avoid setting underpromise or ambiguous net zero targets with misleading climate claims. Companies’ targets should be supported by robust performance data which are collected through the data management system to facilitate monitoring and reporting.
ESR’s Decarbonisation Approach
As part of its ESG 2030 Roadmap, ESR is on track to develop and announce its net zero commitment and strategy this year. This encompasses a carbon mitigation hierarchy approach which prioritises GHG emissions avoidance through low-carbon design and construction (i.e., minimise embodied carbon) and achieves energy efficiency through the asset enhancement initiatives and optimisation of operations (i.e., reduce operational carbon). These efforts will be complemented with the adoption of on-site renewable energy from sources such as solar or hydrogen to further reduce emissions. As of first half of 2023, close to 100 MW of rooftop solar power capacity has been installed across the Group’s global portfolio with approximately 39% of its assets being awarded with sustainability building certifications and ratings. Additional highlights include ESR leveraging on the rooftop space of its assets to provide renewable energy certificates for its customers. For more information, please refer to ESR’s ESG Report 2022.
Climate change has no boundaries and affects the current and future generations. The real estate sector could play a significant role in combating the climate change. However, fighting this uphill battle is a collective effort that requires everyone’s commitment, collaboration, and concerted actions. In accelerating a positive impact in the real estate sector, ESR will lead the way forward to a climate resilient future.
Asia Pacific Data Centre Update: H1 2023 (Cushman & Wakefield)
Asia Pacific is continuing to witness aggressive expansion across primary and secondary data centre markets with 9.7GW operational, 3.3GW under construction and 8.5GW in planned stages across the region.
The usual primary markets, Beijing, Hong Kong, Mumbai, Seoul, Shanghai, Sydney and Tokyo, continue to experience growth despite headwinds originating from a lack of land parcels and power availability. As a result, ancillary locations are being evaluated as part of expansion strategies. The moratorium’s cap on Singapore’s IT capacity has led to unmet demand in the market, which has spilt over into nearshore markets such as Johor, which is seeing a huge pipeline under development and commitments to land banks. Similarly, Greater Jakarta’s large pipeline is driven by its central geographic location in South-East Asia and the country’s immense population growth has sustained its appeal to major investors and operators.
Global cloud service providers (CSP) continue to show a marked interest in secondary markets across the region. Hyperscale CSPs have planned presence in the secondary markets of Auckland, Bangkok, Busan, Kuala Lumpur, Osaka, Pune and Taipei. The tendency for colocation operators, developers and investors to follow CSPs into new frontiers with their own data centre deployments will see secondary markets attract new players and witness rapid growth over the next few years.
The Asia Pacific data centre region is experiencing varying speeds of development and so, for the first time, we have introduced our Asia Pacific Data Centre Markets Maturity Index, to track the evolution of a number of notable markets each quarter. This report will delve into 12 notable markets: Tokyo, Mumbai, Sydney, Singapore, Seoul, Johor, Jakarta, Hong Kong, Manila, Bangkok, Auckland, and Ho Chi Minh City.
Trust the wait: India’s real estate investment story (JLL)
Institutional investors have continued to pose faith in the Indian real estate sector despite the global headwinds, including uncertainty over economic growth and geopolitical tensions. The rise in investment inflow is an indication of the growth opportunities as India continues to emerge as a bright spot among international markets.
The country’s property sector has attracted over USD 2.9 bn/USD 2,939 mn worth of investments across 22 deals during H1 2023. The average deal size of investments increased by 17% to USD134 mn compared to USD115 mn, an aggregate of 2022, according to JLL. The investment pattern continues to be robust and is expected to cross USD 5 bn in CY 2023, which has been the annual trend pre-covid and in 2022.
Key highlights of the report:
H1 2023 witnessed significant increase in domestic capital to 44% share of the total investment compared to 18% in 2022
Office sector remained the most favoured sector with a major share of 66%
Residential sector attracted investments of USD 512 mn across nine deals in H1 2023
Warehousing attracted investment of USD 366 mn i.e.,80% higher than H1 2022
USD 2,792 mn of platform commitment announced across 4 deals in H1 2023 to be invested in the next few years
Successful listing of India’s first retail REITs with 81% anchor contribution by major domestic insurance companies, mutual funds, and pension schemes
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.
