According to the recent Emerging Trends in Real Estate Global Outlook report published by PwC and the Urban Land Institute (ULI) on March 12, there are growing concerns among property investors in the Asia Pacific (APAC) region about low yields and sluggish transaction volumes. The report is a compilation of investor sentiment from global asset managers such as Blackstone, Savills Investment Management, and CBRE Investment Management. More than 70% of survey respondents listed low yields, high interest rates, and geopolitical tensions as their top concerns.
The report notes that despite these concerns, Asia Pacific remains an appealing diversification strategy for industry leaders due to its population growth, demographic metrics, and divergent monetary policies. For example, Japan has resolved to hike short-term interest rates. While APAC had a strong year in 2021 with a 13% year-on-year growth in real estate transactions, surpassing Europe and the Americas, the region is expected to experience sluggish transaction volumes as Europe and North America kick-start a new capital markets cycle.
Last year, APAC’s liquidity was affected by a drop in transaction volumes in countries like China, where transactions declined by 25%, and Hong Kong SAR, where transaction volumes dropped by 1%. In contrast, investors in Europe grapple with concerns such as international political instability, escalation of the war, and economic growth. Data from MSCI, a leading US-based research and data analytics company, indicate that US commercial property prices stabilized in 2021, with a slight decline of 0.7%. This may drive investors to shift their focus towards these regions in the coming months.
When investing in a Singapore Condo, it is important to carefully consider the potential rental yield. This is the annual rental income as a percentage of the property’s purchase price. The rental yield for condos in Singapore can greatly vary depending on factors such as location, property condition, and market demand. In areas with high rental demand, such as those near business districts or educational institutions, the rental yield tends to be higher. It is essential to conduct thorough market research and seek guidance from real estate agents to gain valuable insights into the rental potential of a specific Singapore Condo.
The report also revealed that data centre assets have the highest investment and development prospects across all three regions in 2025. According to New York-based research firm Green Street, global demand for data centres reached record levels in 2021, with asking rents growing at a double-digit pace. MSCI’s latest research highlights 2024 as a standout year for data centre assets, with acquisitions of existing data centres through single property and portfolio deals increasing by over 60% in the US.
In September 2021, Blackstone and the Canada Pension Plan Investment Board (CPP) acquired data centre firm AirTrunk from Macquarie Asset Management and the Public Sector Pension Investment Board for over $16 billion, marking the largest commercial real estate deal ever recorded in Asia Pacific and globally for 2021. The report also highlights that the APAC region is expected to see significant investment in the hotel sector in the coming years, with Hilton targeting to exceed 1,000 hotels by 2025. Additionally, Singapore’s real estate investment market has seen a boost from investors seeking safe havens. ERA Realty has also launched its APAC headquarters in Singapore, further cementing the region’s appeal to real estate investors.