PETALING JAYA: Kuala Lumpur did not have much impact in the Emerging Trends in Real Estate Asia Pacific 2022 survey which covers 22 cities in the region, ranking generally poor (3.79) in terms of investment outlook in cities for 2022, which weakened from the 20th in 2021; and also generally poor (3.92) in terms of the city’s development prospects.
The bottom of the table this year shows almost all of the region’s developing markets, which continue to suffer from high rates of Covid-19 infection.
Reflecting the best performance of last year, the 2022 key markets for investment prospects in the region were characterized by an abundant capital base and a flight-to-safety approach. Tokyo, Singapore and Sydney continue to rank in the top three markets due to the similar general characteristics of economic stability, market liquidity and reliable cash flow.
Tokyo has the brightest prospect next year, swapping places with Singapore, which topped the last two surveys. The Japanese capital continues to benefit from low interest rates and an economy largely fueled by domestic demand, making it relatively less exposed to external shocks. Hong Kong, which has been entrenched at the bottom of the rankings for the past two years, has jumped to 14th fueled by a general opinion that the worst is now over for the city’s real estate markets.
Optimistic sentiment and a growing glut of underutilized capital should provide a lifeline for the strong recovery in Asia-Pacific real estate markets next year, according to the report. The 16th edition of the Emerging Trends in Real Estate Asia Pacific 2022 report is jointly published by the non-profit Urban Land Institute (ULI) and PwC.
Real estate transactions in Asia-Pacific topped US $ 40 billion (RM 168 billion) in the third quarter of 2021, up 12% year-on-year and about the same as in the third quarter of 2019. The pipeline transactions in the region also remain healthy. at $ 68 billion, more than double what it was two years ago.
The activity was led by China, whose zero tolerance approach to the pandemic has so far proven effective in isolating its impact on the world’s second-largest economy. Australia saw a strong rebound with a 145% year-on-year increase in investment in the third quarter of 2021 alone. A few weak spots weighed on the region’s recovery, with Singapore and Hong Kong recovering more slowly while the activity in Japan continues to stagnate.
ULI Asia-Pacific President David Faulkner said the Asia-Pacific real estate market is experiencing a new cycle of growth and investment as the region begins to shed the challenges of the pandemic. At the same time, secular post-Covid-19 trends such as remote working, reduced travel and increased online shopping have resulted in immense structural changes in the industry in its wake.
“As we move into 2022, investors should be thinking about how to take advantage of the opportunities these changes present. For asset owners, a reimagining of obsolete assets and spaces, whether from a sectoral, demographic or environmental perspective, may become a defining theme starting next year.
The Emerging Trends Asia Pacific report is based on a survey of 233 real estate professionals, as well as 101 interviews, including investors, developers, representatives of real estate companies, lenders, brokers and consultants.