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This starter guide provides a quick summary of approaches to responsible investment for direct and indirect real estate investors. It outlines options for including ESG issues in the investment process, management of assets and the relationship between asset owner and investment manager.

Investing in real estate presents two key ESG considerations when compared with many other asset classes. Firstly, real estate is usually a long-term investment, allowing more time for material ESG issues to play out in ways that affect investors, the environment and society. Secondly, many ESG issues play out at a local level, for example extreme weather, water stress, legislative and/or regulatory requirements and community relations. Direct real estate investments are inextricably linked to a specific geographic location, making the incorporation of ESG issues particularly relevant.

This report was originally published in https://www.unpri.org/an-introduction-to-responsible-investment/an-introduction-to-responsible-investment-real-estate/5628.article

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The Fed raised its key benchmark rate by 75 bps in June, to 1.50%-1.75%, to combat inflationary pressures, which reached 8.6% in May, the highest level in over 40 years. Central banks in the region followed suit with hikes in Australia, Taiwan, Hong Kong, India and the Philippines noted. The hawkish stance heightened concerns about a possible US recession, which further clouded capital markets. Yields on 10-year treasuries rose above 3% to peak at 3.5% during the month before falling back. Key sections of the treasury yield curve also inverted as data on US inflation drove traders to boost bets on the pace of Fed tightening. Two-year yields rose above 10-year rates for the first time since April  while five-year yields were noted to have surged as much as 17 bps above 30-year rates to record the widest spread in over two decades. Consequently, markets are pricing in a growing risk that the Fed’s  bid to engineer a soft landing for the world’s biggest economy are likely to falter.

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Pension funds, sovereign-wealth funds, insurance companies and other institutional owners of capital are committing to reduce financed emissions across their portfolios.

This guide from MSCI ESG Research outlines concrete steps to help asset owners convert climate commitments to action.

This guide was originally published in https://www.msci.com/www/research-paper/implementing-net-zero-a-guide/03298099988

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Despite the easing of Covid’s fifth wave in Hong Kong1, the US Fed increasing interest rates has hindered the investment market recovery and delayed investors’ decision-making in Q2. We expect sentiment will pick up in H2 2022 when investors gain more clarity on the rate hike, economic outlook and more relaxed social-distancing rules.

Supported by the strong demand and rental performance, industrial assets should remain the most preferred asset type, while co-living and residential developments are also attractive given solid housing demand. We expect to see funds and real estate firms, which accounted for 87% of the investment volume in Q2, to remain the key driver of the investment market for rest of 2022.

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In H1 2022, despite the economic slowdown in Hong Kong, the market still witnessed solid demand from third-party logistics players (3PLs). This, coupled with tight vacancy, pushed rents up further by 1.1% QOQ in Q2 2022. We recommend landlords or investors consider partnerships with operators from fast-growing sectors like logistics, cold storage, self storage, or data centres by arranging long leases to secure stable rental income and higher yields.

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In Q2 2022, the office market witnessed a pickup in momentum driven by rising leasing enquires and inspection activities, but commitment in leasing deals remained slow. The overall vacancy rate continued to climb up during the quarter, rising by 0.4 ppt to 11.2% in Q2 2022.

Favored by decentralization demand from cost-saving tenants, rents in Tsim Sha Tsui and Kowloon East slightly recovered (up 1.1% and 0.8% QOQ, respectively). We recommend occupiers to explore flight-to-quality moves as more available new stock comes online in H2 2022.

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2019 was a record year for commercial real estate, the office market was at an all-time high with positive sentiments from both occupiers and developers. However, the disruption induced by the COVID-19 pandemic brought the rise to a complete standstill.

Post the second wave in 2021, demand for quality spaces began to rise swiftly and steadily, with occupiers taking utmost advantage of tenant-favorable commercial terms. This trend continues to build up in Q2 2022, despite certain challenges.

The 5 Trigger Points of Commercial Real Estate focuses on fundamental aspects that are silently working to strengthen the recovery and sustain the rise of commercial real estate.

This report was originally published in https://www.cushmanwakefield.com/en/india/insights/five-trigger-points-for-commercial-real-estate

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Responses from real estate investors in Japan were compiled in this survey. The responses include their expected returns, investment outlook, and rental growth. Surveyed firms include asset managers, securitization developers, life insurance, commercial banks and other financial institutions, investment banks, pension funds, and real estate leasing.

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Cushman & Wakefield recently released “Office of the Future Revisited” in which a global view of how the demand for and use of office space is changing. Within the report, three realities were presented:

1. Demand for office space is accelerating;

2. Hybrid is here to stay; and

3. The role of the office has changed.

While all three of these realities are true for the Asia Pacific region, as a geographically large and culturally diverse region, we see nuance in how these realities manifest between markets.

  • Asia Pacific continues to lead the world in office demand
  • The region is, however, lagging somewhat when considering the shift to hybrid working
  • Greater change management needs to be delivered as pressure builds from a growing, younger workforce
  • With the nuances and differences between markets, solutions and approaches will need to vary across the region
  • Corporate employers should begin testing and piloting now to meet the needs of their current and future workforce

This report was originally published in https://www.cushmanwakefield.com/en/insights/apac-office-of-the-future-revisited

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Savills Asia Pacific Real Estate Investment Country Guide covers 13 countries around the region including:

  • China
  • Hong Kong
  • India
  • Indonesia
  • Japan
  • Malaysia
  • Singapore
  • South Korea
  • Taiwan
  • Thailand
  • Vietnam
  • UK
  • US

This report was originally published in https://www.savills.com.hk/research_articles/167189/207024-0

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