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Private assets face demands for transparency amid greater interest from investors seeking to understand risks, performance and how these investments compare to public securities. We speak with Peter Shepard, Head of Fixed Income, Multi-Asset Class and Private Asset Research and Brian Schmid, Global Head of Product Management and Applied Research at Burgiss.

Private assets face demands for transparency amid greater interest from investors seeking to understand risks, performance and how these investments compare to public securities. We speak with Peter Shepard, Head of Fixed Income, Multi-Asset Class and Private Asset Research and Brian Schmid, Global Head of Product Management and Applied Research at Burgiss.

Listen to Podcast Here: https://www.msci.com/perspectives-podcast/private-assets-withstand-public-attention

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Occupiers adopt remote-working concept

At the end of the first quarter of 2020, the country was forced to go into a complete lockdown of business activity due to the pandemic.In March 2020, workplaces were shut, and employees were working from home for the first few weeks. By May 2020, while workplaces had begun to re-open partially with easing lockdown restrictions, not all companies were asking their employees to return to office. Further, we are still witnessing a large proportion of employees working from home. The trend of ‘Work-from-home’ and ‘Work-from-anywhere’ has gained significance thereafter and occupiers have displayed openness to remote working. The poll results suggest that a majority (60%) of occupiers foresee about 21% to 40% of their workforce to be working from a non-office location over the next 12-24 months. However, as occupiers are revisiting their density plans in existing offices to enable a safe return for employees, we expect a gradual revival of the sector and office absorption should start showing signs of recovery in H2 2021. We believe that occupiers will likely resort to a ‘hub & spoke’ model, offering flexibility to employees to work from anywhere or near clients. Hence, the indications are that flexible workspaces will likely gain significance in such a scenario.

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The commercialisation of the property management industry in China started in 1981 with the incorporation of China’s first property management company managing a residential property in Shenzhen. In the subsequent ten years, residential property management continued to mature with the eventual establishment of the Shenzhen Real Estate Management Bureau in 1985. One of the first Grade A office buildings to be professionally managed was the Guangzhou World Trade Centre in 1992, where it was co-managed by Savills and Guangzhou Pearl River Hotel Management. In the early days of property management in China, the sector remained immensely scattered and only basic property management services were provided. The China Property Management Association was eventually established in 2000, with the first nationwide property management regulations issued in 2003. As the property management sector continued to grow, local governments set standards for the market, requiring firms to obtain operation licenses and setting residential property management fee caps.

The industry started to undergo greater liberalisation in 2014-2016, with property managers no longer required to obtain the national ‘Certified Property Manager’ qualification license and commodity housing management fees caps removed and instead set by market forces. In more recent years, property managers have started providing value-added services (VAS) to boost revenues and profit margins. At the same time, many developers have spun off property management divisions in separate listings, with many of them given the mandate to aggressively expand market share, often through mergers and acquisitions. The property management industry is now also taking on a broader range of property types. In addition to the more standard commercial and residential developments, firms are be contracted for work at schools, hospitals, airports, sports stadiums and public utilities, to name just a few.

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  • The aggregate performance of closed- and open-end real estate funds in the U.S. was strikingly similar in recent years, despite large differences in their strategic focus and the roles they play in institutional portfolios.
  • How investors timed their commitments to closed-end funds, as well as how managers drew down and returned capital to investors, contributed toward money-weighted returns that were 2 percentage points higher than their equivalent time-weighted returns.
  • Performance dispersion across closed-end funds created opportunity for investors able to select top-quartile managers, but even those making a large number of commitments potentially faced a wide range of portfolio returns.
  • The aggregate performance of closed- and open-end real estate funds in the U.S. was strikingly similar in recent years, despite large differences in their strategic focus and the roles they play in institutional portfolios.
  • How investors timed their commitments to closed-end funds, as well as how managers drew down and returned capital to investors, contributed toward money-weighted returns that were 2 percentage points higher than their equivalent time-weighted returns.
  • Performance dispersion across closed-end funds created opportunity for investors able to select top-quartile managers, but even those making a large number of commitments potentially faced a wide range of portfolio returns.

To Read More visit: https://www.msci.com/www/blog-posts/open-vs-closed-end-real-estate/02413249714

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With new demand continuing to be led by the technology sector, tightening vacancy to 5.0% from 5.2% in Q4 2020, Colliers recommend occupiers to lock in leases early as rents hit an inflection point. Owners should redevelop older properties into mixed-use developments to unlock value.

Report highlights:

  • CBD Grade A rents stabilised at SGD9.54 per sq ft (-0.3%QOQ) in Q1 2021, as net absorption turned positive after two consecutive quarters of contraction.
  • New demand continued to be led bythe technology sector, tightening vacancy to 5.0% from 5.2% in Q4 2020.
  • Total office or mixed office investment volumes rose 13.9% YOY to SGD850 million in Q1 2021, as confidence returned with the global vaccine roll-out. 
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MANUFACTURING DRIVES INDUSTRIAL SECTOR REBOUND

  • According to the Ministry of Trade and Industry (MTI), Singapore’s economy contracted by 2.4% year-on-year (y-o-y) in Q4 2020, bringing the total change in the overall economic growth in 2020 to a negative 5.4%. In a COVID-19 year, the resilient manufacturing sector played a huge role in cushioning the fallout on the economy, with substantial output expansions in the electronics, biomedical manufacturing and precision engineering clusters.
  • Demand for electronics remains high due to the current global chip shortage. And with Singapore as a major manufacturer of semiconductors, chipmakers in the industrial sector may be compelled to expand existing facilities in order to increase output production.
  • In March 2021, the Singapore Purchasing Manager’s Index (PMI) reported an expansion of 50.8, the highest since March 2019. The optimism among manufacturers prevailed in January and February where the PMI expanded by 50.7 and 50.5 respectively, indicating that the industrial sector is likely to see continued growth in 2021.
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Recommendations and Insights 

We expect office rents and prices to remain under pressure in H1 2021 before bottoming out mid-year, followed by a more stable H2 before rebounding again from 2022 onwards, assuming that Covid is under control within the first half of 2021. We believe that now is a good time for buyers to explore opportunities in the strata-title office sector:

• End-users with long term real estate needs should explore acquisition options, as office prices and rents could rebound quickly in core locations once the market recovers.
• Investors pursuing office sector exposure in Hong Kong, but had previously found it too expensive, should seize this window of opportunity to enter the market.
• Investors looking for offices with smaller lumpsum transaction values should consider areas in Kowloon, which offers more options and attractive pricing.

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The COVID-19 pandemic has exerted an unprecedented toll worldwide. In Asia Pacific, measures to flatten the curve have also ushered in the worst economic slump since the Great Depression with major economies experiencing their first contractions in more than a decade. Still, despite a crippling crisis that can take years to play out, the region’s long-term growth fundamentals remain intact.

Driven by demographic tailwinds, urbanization in the Asia Pacific is an epic boom that will drive the growth of its middle-class and with it, a cycle of rising consumption. Real assets are a play into the region’s structural megatrends that will outlive the pandemic. As the challenge increasingly turns from containment to longer-term recovery, infrastructure investments and REITs are a crucial part of this equation, to fast track the region’s recovery from the pandemic and secure its economic future.

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The Singapore Business Federation introduced a Code of Conduct for Leasing of Retail Premises in Singapore (“COC“) on 26 March 2021. The COC aims to provide a set of guidelines for landlords and tenants of Qualifying Retail Premises to enable a fair and balanced position in lease negotiation, and to provide such landlords and tenants with a governance framework to ensure compliance with an accessible dispute resolution framework.

The COC is effective from 1 June 2021, and it is anticipated that the Government will work closely with the stakeholders to turn the code into legislation. This Update summarises the key features and principles of the COC.

The Singapore Business Federation introduced a Code of Conduct for Leasing of Retail Premises in Singapore (“COC“) on 26 March 2021. The COC aims to provide a set of guidelines for landlords and tenants of Qualifying Retail Premises to enable a fair and balanced position in lease negotiation, and to provide such landlords and tenants with a governance framework to ensure compliance with an accessible dispute resolution framework.

The COC is effective from 1 June 2021, and it is anticipated that the Government will work closely with the stakeholders to turn the code into legislation. This Update summarises the key features and principles of the COC.

For more information Click HERE

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