Thought Leadership

Hong Kong SAR and Singapore are both firmly established as popular locations for multinational corporates to locate their Asia Pacific headquarters.

While the two cities have always enjoyed a competitive rivalry, recent sociopolitical developments and the enactment of anti-pandemic measures, although now abated, have prompted some companies to think about their operational and physical footprint in the region.

This report compares the two markets across seven key factors:

• Influence in Asia Pacific
• Scale of financial industry
• Scale of technology industry
• ESG and green building initiatives
• Talent availability and attraction
• Office rents/price
• Office availability

The report also discusses topical issues such as:

• How the two cities are set up to develop and grow in the post-covid world
• The competitive advantages of the two cities across industries
• Whether real estate pricing and rental gaps are narrowing, and by how much
• How the two cities will evolve over the next decade with reference to government master plans

This report was originally published in https://apacresearch.cbre.com/en/research-and-reports/A-Tale-of-Two-Cities-Hong-Kong-SAR-vs-Singapore

Real estate remains a key asset class within investors’ diversified strategies even as the turmoil in global financial markets and the instability across the capital spectrum continue to cause concerns.

That’s backed by some solid fundamentals, particularly in Asia Pacific. One, the region’s market resilience, versus its European and the US counterparts, put niche assets here on top of investors’ radar, and now, the reopening of China comes in as a shot in the arm. Two, the flight to quality – led by climate actions and return to office initiatives, has fuelled tight occupancy and rental growth across key Asia Pacific markets. Three, alternatives powered by the region’s living, logistics and life sciences sectors are luring investors with new opportunities and robust growth potential. There are several other reasons.

The moot point is the impact of rising interest rates on valuations and cap rates across key Asia Pacific markets appears mitigated, as rental growth remains powered by strong demand on the back of tight vacancy. However, it’s vital today for real estate investors to proactively map the next 12 months and ensure a winning action plan to make the most out emerging opportunities in the year ahead.

Read more to find out the 2023 APAC action plan in a smart investor’s diary

The logistics sector in Asia-Pacific has seen increased interest from both investors and occupiers. This report highlights the prevailing trends including the diversification of demand, the continuing undersupply of logistics properties, and the implications for investors.

This report was originally published in https://www.knightfrank.com/research/report-library/the-state-of-logistics-asia-pacific-focus-report-2023-2023-10082.aspx

With the Asia Pacific commercial real estate market witnessing rapid increases in financing costs, attention is turning to the sizable volume of outstanding senior loans due to mature, which could lead to a funding gap in the next few years.

CBRE estimates that there is currently US$177 billion of outstanding senior commercial real estate debt in Asia Pacific, with a debt funding gap of US$5.8 billion set to emerge in the region between 2023 and 2025.

This Viewpoint looks at the factors underpinning the debt funding gap in Asia Pacific over the next few years, including the markets and sectors that are likely to face the biggest gap, as well as the implications for investors, borrowers and lenders.

This report was originally published in https://www.cbre.com/insights/viewpoints/Asia-Pacific-Viewpoint-Bird-s-Eye-View-on-Asia-Pacific-Commercial-Real-Estate-Debt-Market

• Inbound investment in Singapore in 2022 reached US$7.585 bn, a marginal increase (3.4% y-o-y) from US$7.333 bn recorded in 2021.
• APAC was the largest source of capital, accounting for 72% of real estate investment into Singapore in 2022.
• Singapore’s outbound investment in 2022 reached US$28.284 bn, normalising from the record high of US$47.709 bn in 2021. Despite the drop, Singapore remained the top APAC outbound investor.
• 2022 outbound investment volumes were driven primarily by higher investment in the U.K., which saw a 120% y-o-y increase.

This report was originally published in https://www.cbre.com.sg/insights/viewpoints/singapore-viewpoint-investment-in-out-2022

CBRE’s latest report explores the latest Asia Pacific Data Centre supply, demand and investment figures for 2022, and outlines key trends to watch for 2023.

Key highlights include:

• New supply in Asia Pacific Tier 1 data centre markets (Greater Tokyo, Sydney, Singapore and Hong Kong SAR) fell from 2021’s record-breaking 399MW to 263MW in 2022.
• Regional data centre vacancy fell to 12.4% on the back of solid demand, while leasing demand remained robust and continued to be driven by upgrading demand and ongoing expansion by hyperscalers.
• CBRE expects 765MW of new data centre stock – representing around one-third of total planned capacity – to be delivered by 2025.
• Investment demand weakened in 2022 owing to the rapid increase in financing costs and growing fears of a recession. Asia Pacific direct data centre investment turnover fell to US$1.4 billion, the lowest annual total since 2019.
• CBRE has observed signs of improvement in the investment market in recent months, with nearly US$1.7 billion of new data centre funds raised in Q1 2023. Investment demand will be increasingly focused on greenfield development of prime assets, such as data centres with higher floor loading and/or sustainability certification.

This report was originally published in https://www.cbre.com/insights/reports/Asia-Pacific-Data-Centre-Trends-H2-2022

Cushman & Wakefield’s Office Fit Out Cost Guides provide an indication of the fit out construction costs for occupiers across key cities around the world. Whether it’s a basic, collaborative, or advanced hybrid fit out requirement, these Guides compiled by our Project & Development Services team serves to assist occupiers in defining their capital planning and relocation budgets.

The Guides include a comprehensive fit out cost section covering furniture, professional fees, mechanical & electrical works, construction works, audio visual/IT and other miscellaneous costs, as well as reinstatement and retrofit costs.

Estimated costs provided in our Guides are indicative of market averages based on certain assumptions. Extra costs for specific projects may defer to those presented – we recommend engaging a Project & Development Services professional to advise on precise costings base don your unique construction requirements.

APAC Guide 2023 Highlights

Most, if not all, companies have adopted some form of hybrid working model, often in response to employee expectations of increased workplace flexibility. Similarly, sustainability targets are increasingly becoming the norm, as are more visible practices to foster and promote diversity, equity, and inclusion (DE&I). The role of technology has never been more important – both as an enabler of change and as a means of measuring the impacts of change.

Together, these factors mean that the fitting out of office space goes beyond how the space looks, to include how the space contributes to a company’s financial, social, and sustainability goals whilst also reflecting corporate brand and culture.

For 32 key gateway cities across 12 markets in APAC, the Guide covers:

• 4 key considerations for a best-in-class office fit out: workplace strategy & change management, sustainability, procurement, and technology
• Cost estimates of the different styles of fit out to cater to the post-pandemic workforce
• “All-in” comprehensive fit out cost breakdowns that includes furniture, mechanical and electrical works, construction works, IT, audio visual and miscellaneous costs
• Average costs to retrofit and reinstate office spaces

The growth of major life sciences companies has started to normalise after a period of significant growth during the height of the pandemic. Weaker revenue growth and capital funding in the face of slowing global economies is shaping a new competitive landscape for the life sciences sector and the need for companies to rethink their real estate strategy.

This report explores the latest life sciences real estate trends and their impact on real estate strategy. It also examines the latest developments in R&D Laboratory and Office portfolios, as well as investment demand.

Key highlights are below:

• Office Portfolios: Most life sciences firms are seeking to keep costs under control and are therefore unwilling to add to their office portfolios. Workplace transformation and efficiency are a major focus.
• R&D Laboratory Portfolios: As of the end of 2022, there was more than 100 million sq. ft. of R&D laboratory space in Asia Pacific. Solid leasing demand is driving the emergence of new life science hubs.
• Life Sciences Real Estate Investment: Investment demand remains upbeat, with US$18 billion of funds raised for Asia Pacific life sciences real estate in the past five years. However, a shortage of assets for sale meant just US$717 million of direct investment was recorded in 2022.

This report was originally published in https://www.cbre.com/insights/reports/2023-asia-pacific-life-sciences-real-estate-trends

Released in December 2022, the Hong Kong Innovation & Technology Development Blueprint maps out the overall direction and key strategies for the city’s I&T development over the next five to 10 years with the objective of making the city more competitive and diversifying its sectors. This research paper provides the first in-depth review of the strategic plan towards developing Hong Kong into a world-leading hub for I&T and how it will bring valuable opportunities to the I&T sector and the city’s future development.

This report was originally published in https://www.colliers.com/en-hk/research/hong-kongs-i-and-t-future-and-its-property-implications

The office sector has shifted and while asset owners need to adjust so too do flexible workspace operators, otherwise flexible workspace operators, who were once seen as disruptors to the office market, will themselves be disrupted.

Shifting occupier profiles are leading to white space opportunities. We have seen an uptick in demand for enterprise solutions and turnkey offices. We believe this presents an opportunity for a managed suite product, which is a product yet to become mainstream in many Asia Pacific markets. The question is: who is best placed to deliver this?

Meanwhile, asset owners are aiming to placemake with holistic, integrated, hospitality-led amenity stacks to elevate the occupier experience. Is this an opportunity for a new type of operator?

This is an incredibly exciting time, with occupier trends driving innovation in how the market delivers the workplace of the future. This may be the dawn of Office 2.0; at the very least, it is the dawn of Flex 2.0.

This report was originally published in https://www.knightfrank.com/research/report-library/the-flexible-workspace-outlook-report-2023-2023-10012.aspx