Real estate investors have already started planning their post-pandemic strategies in 2022. However, the road is full of uncertainty as of now. There have been lockdowns for two consecutive years and travel restrictions that had an impact on the investment landscape due to the way people are using real estate in the post-pandemic era. Here is a close look at the real estate investment trends in Asia and Asia Pacific Region in general.
Major trends to look out for
- Investors are looking for safety and are showing preference to invest in liquid and economically stable markets.
- Office assets in large metropolitan markets have retained their popularity and are expected to be in great demand in the coming year.
- Investors see high potential in the repurposing and appreciation of retail assets.
- Environmental, social, governance (ESG) considerations are expected to remain prominent in the coming days.
Investment in office spaces
The office has been a preferred asset class for several years. However, its popularity dipped recently as the last two years have been the age of remote working or work-from-home policies. However, a number of investors appear to be convinced that there will be limited impact in Asia and are taking contrarian bets. These investors are focusing on good-quality, well-located assets.
- Investors are focusing on value-added projects: With the evolving of markets, several existing buildings have started becoming inefficient. Purchasing to innovate is one of the means for arbitraging these efficiencies via altering business usage, upgrading to a higher standard of environment, or use of technology.
- Concentrating on services and operations: Commercial estate is looked upon as a prime option for investment in the real estate sector. Lately, yields are compressing while occupiers are asking for more. Even landowners are now more proactive in managing their assets by investing in intensive asset classes like data centers or by offering new facilities for tenants.
- Purchasing into the new economy: Businesses are giving their attention to the increasing digitization of the economy. This comprises traditional businesses as well as out-and-out tech businesses, which are digitally based like e-commerce retailing, logistic business, which are in demand from internet-based organizations, or online education.
- Investing in decentralization: CBDs or central business districts have been the largest source of wealth traditionally in the real estate sector. At the same time, CBD’s primacy is not secure anymore. Today, secondary business hubs provide cheaper rents. However, a major part of the workforce has been partially working from their homes. On the other hand, many employers have been responding by offering workplaces at a closer distance from where their employees live.
- Niche classes of assets improve yields: Investors in the Asian Pacific countries have been investing in niche assets for several years to get higher and more attractive returns. The same trade continues though it is now perceived as a means to follow a demographic change in society. One such example is – retirement living and millennial shopping preferences and networking requirements are highly in demand for cold storage facilities and data centers.
Contact The Continuum Condo to know more about the latest trends in real estate investments.