Thought Leadership

In our 33rd edition of Main Streets Across the World, we explore the near-term outlook for the retail sector and headline rents and ranking changes for the best-in-class urban locations across the world. In addition, we will share key indicators and trends to watch, including the cost-of-living crunch and changes in e-commerce.  

As the world continues to emerge from the impacts of the global pandemic, prime retail destinations have continued their rebound, recording mostly positive rental growth over the past year.

• Globally, rents rose by an average of 4.8% over the past 12 months, an increase over the 3.7% growth shown in the previous year.
• Asia Pacific led the world in 2023 at 5.3%, which was a strong improvement on the 1.1% growth experienced the previous year.
• Europe also accelerated from experiencing growth of 0.9% YOY in Q3 2022 to 4.2% YOY in Q3 2023, albeit this higher rate was driven by exceptional uplift in Türkiye (without which growth in Europe averaged 2.1% for the year).
• U.S. slowed from 17.0% last year, which was driven by supportive fiscal policies, to a more sustainable 3.2%.

CBRE’s latest leasing market sentiment index reveals that regional leasing sentiment is improving amid a rise in enquiries:

• Tenant enquiries and site visits registered an increase over the surveyed period. Leasing enquiries and inspections remained strong, led by retail.
• While expansionary demand continued to strengthen across the retail sector, there was a slight weakening in requirements for office and industrial space.
• More than half of the respondents believe that rents and incentives will remain flat. The remaining respondents were divided between those having a positive outlook for Singapore and Korea and those expecting a rental decline in Greater China.
• Most major markets reported stronger leasing sentiment. Sentiment in Japan entered positive territory for the first time since 2020, while both Hong Kong SAR and Australia saw sentiment rebound from negative territory. Mainland China was the only market to witness negative sentiment, indicating that this market will require more time to recover.

This report was originally published in https://www.cbre.com.sg/insights/asia-pacific-insights/apac-leasing-market-sentiment-index

The MFIA Quarterly discusses an overview of Japan’s economy, Japan’s real estate market conditions, demography and economic growth.

What we know is that the global commercial real estate (CRE) sector, like many sectors, faces significant near-term headwinds. In Asia Pacific, while the economy remains resilient, the CRE investment market is in the middle of a reset given interest rate uncertainty, tighter lending conditions, and a challenging global environment.  However, we also know that the CRE sector will recover. In fact, historically, the strongest vintage years in terms of CRE returns are the ones that follow periods of dislocation and financial stress.

This report provides a glide path from here to there. That path will not be without challenge; it is therefore just as important to address the near-term challenges as it is to conceptualise the path to clear(er) skies. Our approach to investing is predicated in part on positioning for the future and not missing out on thematic and demographics that will drive Asia Pacific in the next decade.