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During H1 2021, private equity (PE) inflow in Indian real estate was noted at USD2.9 billion, more than a two-fold increase from H1 2020. Over the next three years, we expect more capital to be deployed in build-to-core mixed-use, office and logistics assets as more investment platforms are formed between global private equity funds and local developers. We estimate total PE inflows to reach USD5 billion in 2021.

Some of the key highlights from the latest flash report by Colliers Research – ‘Investments Turbocharged with Focus on Alternate Assets Classes’ are:

• Investors continue to scout for either land or assets in under-construction stage, as they look to build their portfolio for a future REIT listing. About 86% of the total investments in the office sector were in land or projects under-construction.
• Investments in retail assets accounted for 29% of the total investments in H1 2021 as investor appetite remained intact for exposure to stabilized retail assets as well as for investments in ground-up developments in partnership with selective developers.
• The increased demand from e-commerce companies for logistics space has in turn resulted in continued interest from institutional investors with inflows of about USD775 million in H1 2021.

In this edition of The Reimagined Workplace Q&A series, we collaborate with Patrick McCreery, Global Head of Commercial and GM for Southeast Asia at Keppel Data Centres, to focus on disaster recovery – also known as business continuity planning – and discuss how the work ‘place’, ‘space’ and ‘pace’ are evolving within the data centres sector, as well as the opportunities for both occupiers and asset owners, going forward.

Q&A Highlights:

• How has occupier demand for disaster recovery changed in the past 12 months?
• How is cloud adoption transforming occupiers and why are operators following suit?
• What are the long-term outlook for disaster recovery and demand, and the opportunities in this space?
• How do data centres support business continuity planning and the disaster recovery business?

The Asia Pacific office demand declined from 103 million sf in 2019 to 53 million sf in 2020 as occupiers sought to limit cost exposures during the COVID-19 pandemic.
In line with this decline in demand, vacancy has increased, and rents have softened across most markets, pushing them towards greater tenant-friendly status and providing occupiers with a window of opportunity in negotiating any forthcoming lease commitments.

However, corporate occupiers need to be aware that these changes may not bring the cost savings that they might expect – some markets may see tenants having to pay more on a new lease than they were paying on the last year of an expiring lease.

In our Asia Pacific Office Rental Variability Index we take a closer look at:

• The current state of play in 36 key office cities across Asia Pacific
• The extent of, and variability in, rental change over the duration of average lease terms at the city level
• Strategies that occupiers might wish to explore to help navigate the impacts of this rent variability

The COVID-19 pandemic caused a high degree of uncertainty across the Queensland economy and the commercial property market. However, the Industrial and Logistics sector (I&L) has been the clear winner particularly as e-commerce penetration accelerated over the past 18 months and is one of the key drivers of demand for floorspace. Investors have responded by seeking to increase their exposure to the sector, and now investment sale volumes in Queensland was the highest on record in 2020.

This report will detail some the key trends driving the Brisbane industrial and logistics market, and provides greater insights on the supply and take-up of industrial land.

• Commercial real estate investment momentum accelerated in Q2 2021 as the economy continued to pick up along with the commencement of the city’s vaccination programme.
• Property funds collectively deployed HK$5.4 billion, 21% of the quarter’s total, with all acquisitions involving industrial assets.
• Hong Kong’s economic recovery, improved prospects of a border reopening with mainland China, and low financing costs will ensure the investment market remains upbeat in H2 2021.

Most efforts to manage climate and ESG portfolio risks have involved reducing holdings of stocks negatively exposed to these risks, and increasing those that are positively exposed. Professionally managed ETFs and mutual funds have been a natural starting point for investors to align exposures with their objectives, but index derivatives could have a critical part to play, being one of the largest global markets with a substantial role in the financial system and the management and transfer of risk. We investigate the potential for derivatives to help market participants seek to efficiently align exposures with their objectives, while facilitating transparency, price discovery and market efficiency.

• The investment sales volume rose for a fi fth consecutive quarter, up by 62.0% quarter-on-quarter (QoQ) to S$6.18 billion in the second quarter of the year. Compared with the same period last year, investment sales nearly tripled from the low base established when Singapore was under the Circuit Breaker period.

• Residential investment sales constituted the largest proportion of total investment sales of 48.6% in the quarter, increasing by 60.0% to S$3.0 billion.

• Investment sales in the commercial segment continued to grow by 57.5% to S$2.24 billion, with the increment largely attributed to the 75.7% expansion in offi ce investment sales due to more block transactions.

• With stronger performance of the manufacturing sector and growth in the e-commerce and logistics sectors, the industrial segment registered close to S$924.0 million in Q2/2021, up 88.2% from the previous quarter.

• As the vaccination program progresses and with Covid-19 infections in Singapore under control, investor sentiment is expected to remain strong, and this may lead investment sales to return to pre Covid-19 levels in the near future. Yields will compress further as capital piles into the limited stock of investable assets.

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