Thought Leadership

CBRE’s 2024 Global Investor Intentions Survey reveals buyers’ and sellers’ preferred strategies, markets and property types. Highlights of the report include:

• Global investors expect to engage in more buying and selling activity compared with 2023 amid growing optimism that the real estate investment market conditions will improve.
• Although some further cap rate expansion is expected, this trend should start to reverse by midyear.
• While investors in most markets remain cautious in H1 2024, expected interest rate cuts by midyear should lead to improved commercial real estate investment activity in the second half of the year.

This report was originally published in https://www.cbre.com/insights/reports/2024-global-investor-intentions-survey

Against a volatile economic backdrop, the Asia Pacific office market remains steadfast and continues to grow, with a broadly positive outlook. The need to innovate and evolve has not diminished. Companies are striving to meet their Environmental, Social, and Governance (ESG) targets, and new modes of working embrace flexibility, collaboration, and innovation, while fostering diversity and inclusion. The office is central to many of these transformative processes, with an increasing focus on building quality, fit out design, and raw material selection.

This year’s Guide takes a closer look at 33 key cities across the region, as well as:

• Key considerations for a best-in-class office fit out: creating office value, inclusive and sustainable design and partnership with landlords
• Cost estimates of three different styles of fit outs to cater to the post-pandemic workforce
• A comprehensive fit out cost breakdown that includes furniture, mechanical and electrical works, construction works, IT, audio visual and miscellaneous costs
• Three different levels of reinstatement costs, together with average retrofit costs

The pandemic spurred a sharp rise in e-commerce, causing global supply chain vulnerabilities that underscored the need for greater resiliency. Third-party logistics (3PL) warehouse operators had to optimise supply chain operations, cut costs and utilise new technologies. 3PLs have been highly effective, now dominating demand for industrial & logistics space, impacting real estate fundamentals and warehouse building design, and leading to further industry evolution such as fourth-party logistics (4PL) and reverse logistics.

3PLs have grown globally:

• Asia-Pacific: 3PLs accounted for 30%-40% of logistics leasing activity in 2023, with marginal growth ahead. This trend is driven by cost-cutting initiatives and a desire for efficiency amid logistics’ increasing complexity.
• United States: 3PL leasing activity accounted for more than 30% of bulk transactions (over 100,000 sq. ft.) since the pandemic’s onset due to significantly higher e-commerce, requiring corresponding warehouse space. Although economic uncertainty has slowed short-term 3PL growth, the long-term outlook is strong. 4PL will drive even more modern warehouse space demand.
• Europe: 3PLs have become a larger part of logistics leasing demand, increasing by 10+ percentage points since 2019. During this time, for XXL facilities (warehouses over 50,000 sq. m. or 580,000 sq. ft.), final occupiers have increasingly preferred to control the lease themselves and contract a 3PL to operate the warehouse.

This report was originally published in https://www.cbre.com/insights/reports/the-global-outsourcing-of-warehousing

The Asia Pacific real estate landscape is evolving, witnessing a surge in alternative sectors such as data centers and healthcare. A collaborative survey by APREA and CenterSquare Investment Management gathered insights from diverse industry leaders and professionals, revealing a notable inclination towards alternative real estate.

Investors foresee higher potential returns in these sectors over the next 1-3 years, with a strong focus on data centers, healthcare, and multi-family and student accommodations. Challenges include limited stock availability and the importance of operating platforms for optimal returns.

Japan is perceived as the current hotspot, while Indonesia and Thailand emerge as promising markets for the future. The survey emphasizes the need for ongoing education to enhance investor understanding of the evolving real estate dynamics.

Like other commercial real estate sectors, the industrial sector globally has been buffeted by a variety of headwinds and tailwinds over the past few years. Notwithstanding these near-term fluctuations, the underlying driver for the sector in Asia Pacific is one of growth and expansion. This is being fuelled by several sources which is driving transformative change across the region and is creating a range of opportunities for occupiers, developers and investors alike. However, at the same time there are challenges that need to be overcome for the sector to reach its full potential in the region. 

Cushman & Wakefield’s latest industrial report offers a comprehensive view of these drivers and challenges impacting the logistics and industrial sector, as well as put a focus on the trends and provides strategies for key markets such as Greater China, India, and Southeast Asia to help navigate these conditions.

• Intra-APAC trade has increased 5-fold in USD dollar values since 2000, further growth is expected which will force supply chains to become more regionally focused.
• As mainland China continues to move up the value chain, new manufacturing and logistics hubs are emerging, especially across Southeast Asia and India creating opportunities across the region.
• Although labour pools are deep compared to Europe and US, talent is heavily concentrated within the region. At the same time, there is great variability in skill levels, meaning investment in capability and capacity building.
• Port throughput capacity also needs to be expanded across much of the region. India and Southeast Asian markets, cumulatively account for 19% of throughput of the world’s top 50 ports, while China accounts for 45%.
• Sectoral trends are also driving the need to redesign supply chains to incorporate greater flexibility, automation and resilience while also reducing input costs and accommodating greater sustainability initiatives.
• Occupiers of logistics and industrial space can capitalise on these opportunities by expanding into new markets and/or expanding existing facilities to meet the forecast growth in demand. However, they would be well advised to undertake rigorous supply chain mapping and location analysis to help ensure the optimum design of their manufacturing and distribution strategy.
• For investors and developers, opportunities will flow from leveraging existing relationships with tenants to aid their expansion through providing bespoke solutions. In turn, this will provide opportunities to deploy capital and expand portfolio sizes.

The new PMRE Monitor 2024: An AI User Manual provides assistance and offers guidance on the path to the future. The results of the market analysis have been used to create a handbook – an AI User Manual – that prepares players of the real estate industry for the use of AI.

You will learn in detail

• which visions can be realised with AI in the real estate industry,
• how employees can be mobilised to use AI and
• how the transformation of the entire company can be managed.

The Global Real Estate DEI Survey is the only corporate study of diversity, equity and inclusion (DEI) management practices and data benchmarking in the commercial real estate (CRE) industry.

This third iteration of the Global Real Estate DEI Survey is the result of the collaboration between six sponsoring associations NAREIM, NCREIF, PREA, REALPAC, ULI and Ferguson Partners, as well as 14 supporting associations AFIRE, AIA, APREA, AREF, BOMA, BPF, CFMA, CoreNet Global, CREFC, EPRA, NAIOP, OSCRE, PFA and RICS.

This is a summary report of high-level results providing a view of DEI metrics relating to:

• DEI program structure, resources and ownership.
• Policies focused on recruitment, retention and promotion, inclusive culture, tracking and accountability, and pay equity.
• Employee demographics by gender and race/ethnicity, across seniority and job function, as well as DEI hiring, promotion and

departure trends year-over-year.

Survey participants receive a spreadsheet with full data, providing for an in-depth look and suitable for benchmarking DEI policies and achievements against peers.

The Global Real Estate DEI Survey Volume III represents 296,902 full-time real estate employees, $1.98 trillion of assets under management, and a cross-section of the commercial real estate industry in terms of size, region and business classification.

The Survey brings together participation from 216 unique organizations which provided 236 submissions detailing their DEI practices in North America (79.2% of respondents), Europe (11.9%) and Asia-Pacific (8.9%). Data was collected between July 17 and September 29, 2023.

CBRE’s 2024 Asia Pacific Investor Intentions Survey was conducted in November and December 2023. Over 500 responses were received from participants who were asked a range of questions related to their buying intentions, perceived challenges and preferred strategies, sectors and markets for the coming year. 

The survey uncovered persistently weak buying intentions across Asia Pacific, with selling intentions hitting the highest mark since surveys began. Whilst the rate hike cycle has come to a halt in major global markets, investors are waiting for indications that the current repricing cycle has finished before deploying significant amounts of capital.

Investors in most markets (ex. Japan) will therefore continue to adopt a wait and see approach in H1 2024. However, amid growing expectations that the U.S. Federal Reserve will begin cutting rates in H2 2024, and Asia Pacific’s central banks following suit, commercial real estate investment activity should accelerate in the back half of the year.

Other key findings:

• Overall investment sentiment is at the expected level of CBRE’s in-house estimates. Despite similar net buying intentions, more than 40% of investors said they would dispose of more assets in 2024 to realise returns and repay debt. The strongest selling intentions were observed in Australia, Singapore and Hong Kong SAR.
• The survey revealed that value-added investment strategies will gain momentum in 2024 as investors look to hit target returns in markets where negative carry continues to persist.
• Residential assets (especially multifamily and built-to-rent) logged the strongest uptick in interest, particularly among investors considering value-add strategies. Industrial and offices are still the top property type among core investors.
• Healthcare assets remain top of mind for investors looking at alternative assets. Real estate debt climbed to second place in this year’s survey, while a greater emphasis on the living sector (retirement living and student accommodation) was observed.
• Japan retained its position as the most preferred market for cross-border investment for a fifth consecutive year. Singapore and Australia followed in second and third place, respectively. Investors remain attracted to highly liquid markets with stable income.
• Just over 60% of investors, the bulk of which are private equity funds, real estate funds and REITs, intend to retrofit existing buildings to be more sustainable or ESG-compliant in 2024; a trend ensuring value-added strategies are their preferred approach.

This report was originally published in https://www.cbre.com/insights/reports/asia-pacific-investor-intentions-survey-2024

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