Asia's accelerating economic growth, rising industrial output and higher retail sales all point to a positive outlook for the region's property markets during the coming year, according to Colliers International.
Its research led it to expect that tight supply and rising rentals in core city locations will encourage office and retail tenants to relocate to less expensive decentralised areas.
“A striking feature in the market is likely to be a big increase in outbound capital investment by Asian investors,” said Simon Lo, executive director of research and advisory, Asia, at Colliers International. “They will be seeking to exploit the big differences between the property cycles in Asia and the US and Europe in order to achieve better yields and enjoy the strategic benefits of diversification.”
Mainland Chinese investors are set to lead the way in this trend. They are likely to spend at least twice as much on overseas property assets as last year. Their favourite investment destinations will be gateway cities such as London, New York and Chicago. Taiwanese institutional investors will also be major players, after the recent relaxation of regulations concerning overseas investments by the authorities in those places.
Meanwhile, South Korea will be following suit to see a more relaxed policy on acquisition of overseas real estate by Korean nationals.
In Hong Kong, a key trend of shifting from core to non-core locations is expected. This applies not only to office occupiers, which relocations to Kowloon East have seen, but also to retailers who continue to shift their focus from high streets to suburban locations.
The growth in the luxury segment of Hong Kong’s retail market has decelerated, with the impact of the mainland’s political reforms on anti-extravagance rules that deter China tourists’ purchase of luxury goods. Moreover, as the number of same-day visitor arrivals in Hong Kong increases, the market has observed a change of spending pattern towards mid-priced products and daily necessities such as beauty and personal care products.
These explain the growing demand in locations out of the traditional high streets that are mostly occupied by international brands and luxury retailers, Lo said.
He added that overall, Asia’s office-leasing sector would remain steady, with rents increasing by an average of around 3 per cent across the region this year. However, there will be some big variations.
Jakarta and Manila are expected to remain the hot spots. These two cities saw substantial increases in rents last year, and the trend is set to continue with 13 per cent and 9 per cent growth this year.
Singapore’s recovery from a cyclical downturn and growing demand will probably fuel a hefty 12-per-cent increase there too.
The performances of office markets in different regions of China will be mixed.
Asia’s two key laggards are expected to be Hong Kong, because of limited growth in demand, and India, where economic and political concerns have dampened market sentiment.
Meanwhile, Asia’s logistics-real-estate sector will definitely benefit from increasing logistics throughput this year. The rents of industrial and logistics premises will grow by an average of about 3 per cent, as more small and medium-sized companies outsource logistics operations to third-party operators.
Industrial and logistics rents in Manila are expected to remain the fastest-growing in Asia, although by a more modest 21 per cent this year. Singapore is the only market that will likely experience a small decline in industrial rents.
Colliers forecasts that retail rents will grow by an average of about 3 per cent across Asia this year, with retailers increasing their emphasis on decentralised locations. While retail rents in Guangzhou,