Apac real estate investment activity to rise in 2H2023: CBRE survey

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Both the Bukit Panjang MRT Station (Downtown Line) and LRT Station (Bukit Panjang Line) are just a few minutes walk away from The Myst Bukit Panjang.

The luxury condominium boasts quality finishes with high end fittings and well designed layouts that would definitely meet the needs of the residents. In addition, there are also numerous attractions and shopping malls located close to The Myst Bukit Panjang, such as Junction 10 Shopping Centre, Bukit Panjang Plaza, Hillion Mall, and more. With countless amenities and convenience located nearby, the residents of The Myst Condo would definitely enjoy the perks living there.

CBRE’s survey reveals that investors expect a pick up in real estate investment activity in the Asia Pacific (APAC) region in the second half of 2023. This is due to reduced uncertainty regarding interest rates, and a rise in capitalisation rates (cap rates). These cap rates measure a property’s value by dividing its annual income by its sale price.

The survey found that cap rates have risen in 1H2023 for all property types, across most APAC cities apart from Japan and mainland China, where prevailing interest rates remain steady. Consequently, a narrowing price gap has been seen in Grade-A office, retail, institutional-grade modern logistics, hotel and multifamily properties.

In the coming months, cap rates are expected to increase by an additional 75 to 150 basis points, backed by higher borrowing costs and an unpredictable economic environment. This, along with more clarity on interest rates, has prompted nearly 60% of respondents to believe that activity in Apac will commence in the second half of the year.

The survey also found that Japan is set to lead the investment revival in 3Q2023, followed by Mainland China and Hong Kong in 3Q2023, and Singapore, India and New Zealand in 4Q2023. Private investors continue to have the strongest buying appetite, although real estate funds and REITs are also looking to sell due to current refinance pressure and the need to rebalance portfolios.

Cost and availability of financing is the most important consideration for investors when assessing potential acquisitions – as interest rates have increasing and lending standards have become more stringent. This is especially apparent in markets such as South Korea, Australia and Singapore, where the biggest funding gap is likely to be seen over the next 18 months.

Henry Chin, CBRE’s global head of investor thought leadership and head of research, Asia Pacific, comments: “Interest rate hikes have significantly increased the cost of financing for commercial real estate in the region, with higher interest expenses deterring investors from refinancing assets.” As such, motivated sellers are expected to emerge in the following months.