CBRE APAC Investor Intentions Real Estate Survey 2024: Top 5 Countries Net Buying Intentions are South Korea +15%, Japan +8%, Singapore +8%, Australia +7%, Mainland China +7%, Top 3 Sectors for Investments are Industrial & Logistics, Office, Residential, Top 3 Preferred Alternative Asset are Healthcare-Related Assets, Real Estate Debt & Data Centres
23rd February 2024 | Hong Kong
CBRE, the world’s largest commercial real estate services & investment firm, has released the CBRE APAC Investor Intentions Real Estate Survey 2024, providing key insights from 510 APAC investors on investing in real estate (Investors: Real Estate Fund, Developer, Owner, Operator, REIT, Insurance Company, Private Equity Fund, HNWI, & Family Office). For 2024, the Net Buying intentions remain largely unchanged, +6% 2023 vs +5% 2024. 2024 Selling intentions is High. The Top 6 Countries Net Buying Intentions are South Korea +15%, Japan +8%, Singapore +8%, Australia +7%, Mainland China +7%, Hong Kong -11%. Top 5 Most Active Investors Type – Family Offices & HNWIs, Institutions, Equity Fund Managers, Developers & REITs, Debt Providers. Top 5 Investors by Country to increase real estate allocation in 2024 – Australia, South Korea, Mainland China, Singapore, Japan. Top 6 Reasons to increase allocations to real estate in 2024 – Reasonable price adjustment, More distressed opportunities, Stabilizing interest rates & potential for decreasing debt costs, Mandate to deploy capital, Improved expected total return, Capitalise on potential income return growth. Top 9 Major Challenges for Real Estate Investment in 2024 – Central bank policy rates remain higher for longer, Fear of a recession & economic uncertainty, Mismatch in buyer & seller expectations, Escalating labour & construction cost, Uncertain geo-political landscape, Weak tenant demand, Shift in credit availability & loan terms, Higher &/or more persistent inflation, Impact of currency fluctuation. Top 7 Sectors for Investments – Industrial & Logistics, Office, Residential (Multifamily / build-to-rent), Residential (build-to-sell), Hotels / Resorts, Retail, Alternatives. Top 9 Preferred Alternative Asset for 2024 – Healthcare-related assets, Real Estate Debt, Data Centres, Retirement living & Senior housing, Student living, Cold storage, Infrastructure (social & economic infrastructure), Self-storage. Top 3 Real Estate Investors Price Expectation for Discount- Grade A Office, Shopping Mall, High Street Retail. Top 5 Preferred Developed Markets for Cross-Border Investment – Japan, Singapore, Australia, South Korea, Hong Kong. Top 3 Preferred Emerging Markets for Cross-Border Investment – India, Vietnam, Thailand. Price premium of ESG assets vs non-ESG asset – 74% (No price premium: 26%). See below for key findings & summary | View report here
“ Top 5 Countries Net Buying Intentions are South Korea +15%, Japan +8%, Singapore +8%, Australia +7%, Mainland China +7%, Top 3 Sectors for Investments are Industrial & Logistics, Office, Residential, Top 3 Preferred Alternative Asset are Healthcare-Related Assets, Real Estate Debt & Data Centres “
CBRE APAC Investor Intentions Real Estate Survey 2024
CBRE, the world’s largest commercial real estate services & investment firm, has released the CBRE APAC Investor Intentions Real Estate Survey 2024, providing key insights from 510 APAC investors on investing in real estate (Investors: Real Estate Fund, Developer, Owner, Operator, REIT, Insurance Company, Private Equity Fund, HNWI, & Family Office). View report here
CBRE APAC Investor Intentions Real Estate Survey 2024:
Investors Profile:
- Real Estate Fund – 34%
- Developer / Owner / Operator – 24%
- REIT – 10%
- Insurance Company – 9%
- Private Equity Fund – 7%
- HNWI / Family Office – 5%
- Pension Fund – 3%
- Others – 8%
Investors Country:
- Japan – 23%
- Mainland China – 21%
- Singapore – 12%
- Taiwan – 11%
- Australia – 8%
- Hong Kong – 9%
- South Korea – 11%
- India – 1%
- Others – 5%
Summary:
- 2024 Net Buying intentions – Unchanged (+6% 2023 vs +5% 2024)
- 2024 Selling intentions – High
- Top 6 Countries Net Buying Intentions – South Korea +15%, Japan +8%, Singapore +8%, Australia +7%, Mainland China +7%, Hong Kong -11%
- Most Active Investors Type – Private Investors, Family Offices & HNWIs
- Top 5 Most Active Investors Type – Family Offices & HNWIs, Institutions, Equity Fund Managers, Developers & REITs, Debt Providers
- Top 5 Investors by Country to increase real estate allocation in 2024 – Australia, South Korea, Mainland China, Singapore, Japan
- Top 6 Reasons to increase allocations to real estate in 2024 – Reasonable price adjustment, More distressed opportunities, Stabilizing interest rates & potential for decreasing debt costs, Mandate to deploy capital, Improved expected total return, Capitalise on potential income return growth
- Top 9 Major Challenges for Real Estate Investment in 2024 – Central bank policy rates remain higher for longer, Fear of a recession & economic uncertainty, Mismatch in buyer & seller expectations, Escalating labour & construction cost, Uncertain geo-political landscape, Weak tenant demand, Shift in credit availability & loan terms, Higher &/or more persistent inflation, Impact of currency fluctuation
- Top 6 Major challenges sourcing debt for real estate investment – Less favourable loan-to-value (LTV) ratios &/or credit spreads, Increase in interest expenses on new loans, Uncertainty regarding direction of interest rate movements, Reduced loan size on refinancing as a result of decline in capital values, Lowered interest coverage ratios (ICRs), Tight bank lending approval process
On Real Estate Investment & ESG
- Top 7 Sectors for Investments – Industrial & Logistics, Office, Residential (Multifamily / build-to-rent), Residential (build-to-sell), Hotels / Resorts, Retail, Alternatives
- Top 9 Preferred Alternative Asset for 2024 – Healthcare-related assets, Real Estate Debt, Data Centres, Retirement living & Senior housing, Student living, Cold storage, Infrastructure (social & economic infrastructure), Self-storage
- Top 3 Real Estate Investors Price Expectation for Discount- Grade A Office, Shopping Mall, High Street Retail
- Preferred Strategies & Sectors in 2024 – Value-add
- Top 5 Value-Add Strategy Preferred Sector – Residential, Industrial & Logistics, Office, Retail, Hotels / Resorts
- Top 5 Preferred Developed Markets for cross-border investment – Japan, Singapore, Australia, South Korea, Hong Kong
- Top 3 Preferred Emerging Markets for Cross-Border Investment – India, Vietnam, Thailand
- Top 3 ESG evaluation for new investments in 2024 – Retrofit existing buildings to be more energy efficient & ESG-compliant, Acquire & develop green buildings, Enable on-site renewable energy generation
- Price premium of ESG assets vs non-ESG asset – 74% (No price premium: 26%)
- Top 3 Factors on Desired office locations in the next 3 years (To increase) – ESG-certified buildings 64%, Flexible or cowering spaces 52%, Decentralised offices 36%
1) Investors Buying & Selling intentions in 2024
2024 Buying & Selling intentions:
- Net buying intentions – Unchanged (+6% 2023 vs +5% 2024)
- 2024 Selling intentions – High
Net Buying Intentions (Last 10 years):
- 2015: +23%
- 2016: +1%
- 2017: +6%
- 2018: +3%
- 2019: +6%
- 2020: +13%
- 2021: +25%
- 2022: +24%
- 2023: +6%
- 2024: +5%
Top 6 Countries Net Buying Intentions:
- South Korea: +15%
- Japan: +8%
- Singapore: +8%
- Australia: +7%
- Mainland China: +7%
- Hong Kong: -11%
Investors Insights:
- More than 40% of investors intend to sell assets in 2024 to realise returns & repay debt
- Selling intentions strongest in Australia, Singapore & Hong Kong
- Buying intentions strongest in South Korea, Japan & Singapore
- Buying intentions weakest in Hong Kong
- Hong Kong economy expected to recover in 2024 supported by stronger growth in Mainland China & potential interest rate cuts
- Weak buying intentions from Mainland China investors
Top 5 Most Active Investors Type:
- Private Investors, Family Offices & HNWIs – Core prime assets in tier 1 markets, Opportunistic, Value-add deals
- Institutions – Risk adverse & await for price adjustments, Focus on Core-plus opportunities in office & industrial space to achieve target returns
- Equity Fund Managers – Challenging to raise new funds, Private equity funds with expiring mandates to be active in 2024 with focus on Japan
- Developers / REITs – Hard to get bank financing, Need to sell to fund development projects, APAC REITs not recovering yet, United States REITs early signs of recovery
- Debt Providers – Insurance companies & Private equity funds expands in APAC to capitalise on current market conditions
Investors by Country to increase Real Estate Allocation in 2024:
- Australia – More than 53% of investors to increase allocation
- South Korea – Around 50% of investors to increase allocation
- Mainland China – Around 42% of investors to increase allocation
- Singapore – Around 39% of investors to increase allocation
- Japan – Around 37% of investors to increase allocation
- Hong Kong – Around 27% of investors to increase allocation
Top 6 Reasons to increase allocations to Real Estate in 2024:
- Reasonable price adjustment – 23%
- More distressed opportunities – 17%
- Stabilizing interest rates / Potential for decreasing debt costs – 14%
- Need / mandate to deploy capital – 14%
- Improved expected total return – 11%
- Capitalise on potential income return growth – 7%
9 Major Challenges for Real Estate Investment in 2024:
- Central bank policy rates remain higher for longer
- Fear of a recession & economic uncertainty
- Mismatch in buyer & seller expectations
- Escalating labour & construction cost
- Uncertain geo-political landscape
- Weak tenant demand
- Shift in credit availability & loan terms
- Higher &/or more persistent inflation
- Impact of currency fluctuation
Top 6 Major challenges sourcing debt for real estate investment:
- Less favourable loan-to-value (LTV) ratios &/or credit spreads
- Increase in interest expenses on new loans
- Uncertainty regarding direction of interest rate movements
- Reduced loan size on refinancing as a result of decline in capital values
- Lowered interest coverage ratios (ICRs)
- Tight bank lending approval process
Expected direction of central bank policy rates in 2024 (Majority of respondents):
- Mainland China – Reduce less than 50 bps
- South Korea – No change or Reduce less than 50 bps
- Hong Kong – No change or Reduce less than 50 bps
- Singapore – No change
- Australia – No change or Increase by less than 50 bps
- Japan – Increase by less than 50 bps
2) Preferred Investment Strategies & Sectors
Top 7 Sectors for Investments:
- Industrial & Logistics
- Office
- Residential (Multifamily / build-to-rent)
- Residential (build-to-sell)
- Hotels / Resorts
- Retail
- Alternatives
Top 9 Preferred Alternative Asset for 2024:
- Healthcare-related assets (including life sciences & medical offices)
- Real Estate Debt
- Data Centres
- Retirement living / Senior housing
- Student living
- Cold storage
- Infrastructure (social & economic infrastructure)
- Self-storage
Investors Price Expectation for Discount:
- Grade A Office (value-add) – 65% of investors expect discount
- Grade A Office (core) – 61% of investors expect discount
- Shopping Mall – 57% of investors expect discount
- High Street Retail – 51% of investors expect discount
- Prime Logistics – 49% of investors expect discount
- Multifamily – 36% of investors expect discount
- Hotel – 35% of investors expect discount
Preferred Strategies & Sectors in 2024:
- Value-add
- Core-plus
- Core
- Opportunistic
- Distressed assets & NPL
- Debt
Value-Add Strategy Preferred Sector:
- Residential
- Industrial & Logistics
- Office
- Retail
- Hotels / Resorts
- Others
Core-Plus Strategy Preferred Sector:
- Residential
- Industrial & Logistics
- Office
- Retail
- Hotels / Resorts
- Others
Core Strategy Preferred Sector:
- Office
- Industrial & Logistics
- Residential
- Hotels / Resorts
- Retail
- Others
Opportunistic Strategy Preferred Sector:
- Industrial & Logistics
- Residential
- Office
- Hotels / Resorts
- Others
- Retail
Distressed assets & NPL Strategy Preferred Sector:
- Residential
- Industrial & Logistics
- Office
- Retail
- Hotels / Resorts
- Others
Debt Strategy Preferred Sector:
- Residential
- Industrial & Logistics
- Others
- Office
- Hotels / Resorts
- Retail
3) Investment Destination
Top 5 Preferred Developed Markets for Cross-Border Investment (Key strategy):
- Japan – Core to Value-add
- Singapore – Core to Value-add
- Australia – Core to Opportunistic
- South Korea – Core-plus to Value-add
- Hong Kong – Core-plus to Opportunistic
Top 3 Preferred Emerging Markets for Cross-Border Investment (Key strategy):
- India – Value-add to Opportunistic
- Vietnam – Opportunistic
- Thailand – Value-add to Opportunistic
4) ESG & Commercial Real Estate Investment
Top 10 ESG evaluation for new investments in 2024 (No. of Respondents):
- Retrofit existing buildings to be more energy efficient / ESG-compliant – More than 60%
- Acquire / develop green buildings – Around 55%
- Enable on-site renewable energy generation (eg. solar) – More than 40%
- Install EV car chargers – Around 38%
- Consider climate risk for new acquisitions – Around 30%
- Access to green financing / loans / bonds – Around 30%
- Incorporate green lease – Around 27%
- Invest in or develop socially responsible housing (eg. economic housing, senior housing) – Around 18%
- Dispose aged, non-green assets – Around 17%
- Do not factor ESG in investments – Around 10%
Price premium of ESG assets vs non-ESG asset (No. of respondents):
- No price premium – Around 26% (74% price premium)
- Less than 5% premium – Around 43%
- 6% to 10% premium – Around 24%
- 11% to 15% premium – Around 5%
- 16% to 20% premium – Around 1%
Desired office locations in the next 3 years (To increase):
- ESG-certified buildings – 64%
- Flexible or cowering spaces – 52%
- Decentralised offices – 36%
- Grade A CBD offices – 30%
- Grade A offices in major districts outside CBD – 28%
- Grade B CBD offices – 24%
Desired office locations in the next 3 years (To reduce):
- Grade B CBD offices – 31%
- Grade A offices in major districts outside CBD – 25%
- Grade A CBD offices – 20%
- Decentralised offices – 18%
- Flexible or cowering spaces – 12%
- ESG-certified buildings – 3%
The CBRE APAC Investor Intentions Real Estate Survey 2024, providing key insights from 510 APAC investors on investing in real estate (Investors: Real Estate Fund, Developer, Owner, Operator, REIT, Insurance Company, Private Equity Fund, HNWI, & Family Office). View report here
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2022 revenue). The company has approximately 115,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.
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