RevPAR and ADR performance across Asia Pacific in Q2
The recovery of Singapore’s hotel market, including an outlook of supply
The case for investing in hotel assets and recommended strategies for investors
Two quarters into 2022 and what travel in a post-COVID-19 world will be is starting to take shape. Travel restrictions continue to be reduced en-masse across the world, with airline traffic up to 69% of pre-COVID (2019) levels at the end of March 2022. According to the latest forecast by IATA, air traffic is expected to exceed pre-COVID levels by 2024. Driving demand for those seats will be domestic and increasing number of tourists, with the UNWTO forecast that by tourism arrivals would have exceeded 2019 levels by the end of 2023 in certain regions.
Once heralded as the harbinger of doom for business and group travel – it seems the desire to meet in-person has once again triumphed, as leisure (mostly visit, friends and relatives), meetings, and events travel lead the recovery.
However, once again head winds threaten. Whether it’s the ever-present threat of a resurgence of a deadly variant, high inflation, labour bottlenecks and increased cost of living has meant reduced disposable income. Question is, will the desire to travel outweigh the need to save, thereby dampening the recovery, at least in the short-term.
In terms of hotel performance, room occupancies across Asia increased to 48.5%, with ADR improving to US$83.69, a recovery in RevPAR of 12.3%. However, there remains a great divide between the more open Southern countries versus the closed Northern region, with China especially remaining closed for the foreseeable future.
Monetary Authority of Singapore (MAS) Sustainability Report 2021/2022
This report sets out MAS’ strategy on climate resilience and environmental sustainability to strengthen the resilience of Singapore’s financial sector to environmental risks, develop a vibrant green finance ecosystem, build a climate-resilient reserves portfolio, and incorporate sustainable practices.
Climate Reporting in ASEAN: State of Corporate Practices
Landmark research from Global Reporting Initiative (GRI) and the National University of Singapore (NUS) Business School has, for the first time, shed light on how companies in the ASEAN region are addressing their obligations for climate-related reporting.
Analysis of the top 100 largest listed companies in six Southeast Asian nations – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – finds 70% (420 companies) published climate-related disclosures in 2020/2021. Climate Reporting in ASEAN: State of Corporate Practices analyzes those 420 businesses, focusing on their approach to reporting, materiality, risks and opportunities, governance, strategy, targets, and performance.
Key findings of the research include:
Most of the companies (84%) report their material topics on climate change, yet only one quarter (26%) describe long-term factors related to their climate risk strategy;
62% of companies disclose their greenhouse gas emissions (ranging from 5% in Vietnam to 80% in the Philippines);
A majority of businesses (56%) identify climate-related opportunities, compared with less than half (47%) sharing plans on risk mitigation;
Three-in-four companies (74%) disclose metrics on climate-related performance, however, 46% do not share how targets are discussed;
Two-third (68%) assign climate responsibilities to a sub-committee, while 8% link management remuneration to climate
In terms of climate reporting:
A significant majority of sampled companies (85%) use the GRI Standards, ranging from Singapore (99%) to Vietnam (65%);
In the six markets, reporting using other frameworks is low: 19% use TCFD, 16% apply IIRC, and 14% use SASB;
At 76%, reporting on the Sustainable Development Goals is widespread by the companies in all six countries, with those from Thailand (95%) and Indonesia (93%) leading the way.
Supply Chain Network Design and Optimisation: Keeping lean supply chains relevant in a post-pandemic world (Cushman & Wakefield)
A lean supply chain, at its heart, focusses on inventory optimisation and operational excellence. It aims to eliminate waste at every stage of the production and distribution process, and so have courted additional terms such as “continuous flow” and “just-in-time”. The critical aim is optimisation of inventory management rather than minimisation, and with its focus on consistency and repeatability, lean supply chains are designed to be arguably less flexible. For this reason, some have come to view this type of network as irrelevant in a disrupted world – agility rules. However, this is not the case.
Cushman & Wakefield’s latest report, Keeping Lean Supply Chains Relevant in a Post-pandemic World, explores key trends in the supply chain industry, highlighting the importance of optimising supply chain networks, with a key focus on lean supply chain and how it will continue to be relevant.
Tackling Scope 3 emissions: The opportunities and challenges for service businesses (Cushman & Wakefield)
By Alton Wong, Executive Director, Co-head of Sustainability Services, Greater China, Cushman & Wakefield
For businesses in carbon-intensive industries, the challenge of reducing Scope 1 emissions (direct emissions from owned or controlled sources) can be great.
For service-based organizations, Scope 1 emissions may represent only a single-digit percentage of their entire carbon output. In these cases, the majority of their emissions are Scope 3 – they originate further up or down their supply chain through the activities of their suppliers.
So how do service businesses, like financial institutions and consultancies, reduce what they cannot control?
The data challenge
Any carbon reduction journey begins with reporting: you cannot manage what you cannot measure. While we have seen an increase in queries on ISO14064 – the international standard for reporting greenhouse gas emissions – reporting requires data, and capturing reliable data is the greatest challenge we see across the region.
In many cases, the data needed even to establish a baseline year – the year to which emissions will be compared – is not captured. While most, but not all, companies have utility data, few capture emissions for business travel or employee transport. This problem is compounded when tackling Scope 3 emissions.
Collaboration is the only way forward
As a service organization ourselves, Cushman & Wakefield’s Scope 3 emissions account for greater than 98 percent of our total emissions. That is why a key pillar of our net zero commitment is to engage our clients in their own carbon reduction journeys.
For businesses like ours, achieving a net zero commitment – which includes Scopes 1, 2 and 3 – is dependent on our supply chain doing the same. The good news is that it is a two-way street: by reducing our own direct emissions (by implementing energy efficiencies such as updated HVAC and LED lighting, for example) we are also bringing down the Scope 3 emissions of our clients. Similarly, when our clients implement energy efficiencies (their Scope 1), they reduce our Scope 3.
As more companies set net-zero targets, it is increasingly apparent that we are all in this together. At Cushman & Wakefield we have our own data challenges to overcome – especially around Scope 3 emissions. Like all companies, we are working hard to constantly improve, and to share our learnings with others, because we know that we will not reach net zero alone.
Alton Wong, MRICS
Executive Director, Head of Advisory Services, Valuation & Advisory Services, Greater China Co-head of Sustainability Services Cushman & Wakefield
Alton Wong, MRICS
Executive Director, Head of Advisory Services, Valuation & Advisory Services, Greater China Co-head of Sustainability Services Cushman & Wakefield
Alton is the Executive Director and Head of Advisory Services in the Valuation & Advisory Department, Greater China as well as Co-head of Sustainability Services, with over 16 years of experience in valuation and advisory services, particularly for due diligence, auditing, public document and financing purposes in Hong Kong, Mainland China and other Asia Pacific countries.
Leading the Greater China Advisory Services team, Alton provides valuation, feasibility and market study, market positioning, performance assessment, development advisory services etc., which covering different areas of alternative investments, including senior housing, logistics property, data centre and life science park.
He also has extensive experience in environmental, social and governance (ESG) advisory services, covering ESG ratings, Global Real Estate Sustainability Benchmark (GRESB), Task Force on Climate-related Financial Disclosures (TCFD), energy solutions, sustainable development, green/ wellbeing building certifications services etc. He is also our committee member of C&W’s Global Corporate Social Responsibility team.
Alton is also one of the drafting members of the HKIS Valuation Standards 2017 and 2020 editions.
Reference Guide on REITs and Infrastructure Trust Regulations and Taxation across APAC
REITs and Infrastructure Trusts have been gaining traction across Asia-Pacific. Many countries have begun to test waters by releasing their pioneer REITs. Philippines has launched their pioneer REIT in 2020, alongside UAE that released their first Green REIT, whilst China’s highly anticipated REIT pilot program finally came to fruition in June 2021, with the launch of the retail tranches of its first nine REITs all oversubscribed on its first day. China REITs are currently only backed by infrastructure assets packaged in a mutual fund structure, deliberately picked by authorities to spearhead the country’s recovery from the pandemic.
India made its debut for REITs with Blackstone and Embassy-sponsored Embassy Office Parks REIT getting listed on April 1, 2019 as India’s first Real Estate Investment Trust.
Two other REITs, the Raheja Group-backed Mindspace Business Parks REIT and more recently, Brookfield India REIT, have also debuted on the Indian stock exchanges. Together, these three REITs total approximately USD 7.5 billion of market capitalization and cover 86.0 million square feet of Grade-A commercial office space in India. India’s infrastructure investment trust (InvIT) market is growing leaps and bounds and stands at over USD 10billion and is expected to expand to over US$100 billion in the next five years, according to CRISIL Ratings.
The adoption of REITs will continue to accelerate with momentum in 2022 likely to be sustained by the region’s emerging markets. Thailand has already four in waiting. Philippines unveiled its first REIT at the height of the pandemic last year.
This reference guide covers REITs and Infrastructure Trust regulations and taxation in Australia, China, Hong Kong, India, Japan, and Singapore.
An increasing number of institutions, especially financial institutions, have started to disclose climate-related risks and opportunities in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
MSCI ESG Research LLC data and metrics can be used at the portfolio, sector and security level to support reporting on the four pillars of the TCFD recommendations: governance, strategy, risk management and metrics and targets.
Singapore Market Outlook H2 2022 (Cushman & Wakefield)
With Singapore’s economy in a position of strength, being forecasted to surpass pre-pandemic average annual growth numbers by growing 3.8% year-on-year in 2022, Cushman & Wakefield’s latest Singapore Market Outlook H2 2022 report expects the overall Singapore property market to see relatively strong but slower growth as investors seek out safe havens for wealth preservation and diversification amidst global uncertainties.
Asia Pacific ViewPoint – Landlords and Tenants Must Collaborate to Achieve Sustainability (CBRE)
With the pandemic now well into its third year, most office occupiers in Asia Pacific are displaying a clear shift towards embracing real estate strategies that recognise that COVID-19 is here to stay for the long-term.
Among these approaches are a sharper focus on wellness and sustainability in the workplace, with CBRE Asia Pacific’s 2022 Spring Office Occupier Survey finding that most tenants are implementing or at the very least considering a range of related initiatives.
This ViewPoint by CBRE Research expands upon the survey findings and identifies the main challenges and priorities facing landlords and investors as they look to respond to growing occupier demand for green buildings, leases and technologies.
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.
