KUALA LUMPUR, Nov 24 (Bernama) -- The 17th edition of the Emerging Trends in Real Estate Asia Pacific Report highlighted a downtick in investor sentiment due to concerns over rising cost of debt, higher inflation, and a looming global recession.
The persistence of global inflationary trends, a recessionary economy, and deterioration of global indicators saw investors opting to suspend buying until the fallout from synchronised global rate hikes becomes clearer.
A dip in regional transaction volumes is apparent, with third-quarter deal count in Asia Pacific slipping 38 per cent year-on-year to US$32.6 billion (US$1=RM4.50), recording the lowest third-quarter volumes for a decade in the region.
“Mainland China accounted for the biggest decline with a fall of 23 per cent year-on-year,” it said in a statement.
Urban Land Institute (ULI) Asia Pacific president David Faulkner said the rising interest rates and slowing global economy are beginning to impact regional asset valuations and changing the way investors assess potential deals.
“As a long-term inflation hedge, real estate will continue to draw capital, but the industry is also likely to undergo significant change over the coming years, due to the evolving economic environment and changes in the ways that people use the built environment.”
The top markets for investment prospects in the region were characterised by deep, liquid markets and a flight-to-safety approach. Singapore, Tokyo and Sydney continued to rank as the top three markets.
Investors have begun to realign strategies towards defensive properties more resilient to unusual economic pressures, and towards assets that can offer features such as rent indexation, shorter lease term and reliable recurrent incomes.
New economic sub-sectors such as data centres, cold storage infrastructure, life science facilities, and self-storage space have had increasing attention as recession-resistant investment vehicles, owing to a confluence of factors: growing 5G takeup, structural undersupply to meet demand, and the evolution of more sophisticated supply chains.
Based on a survey of 233 real estate professionals and 101 interviews with investors, developers, property company representatives, and lender brokers, the report is the regional real estate forecast jointly published by ULI and PwC.
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