Delayed interest rate cuts expected to push back recovery in Apac real estate investments
The delays in rate cuts are expected to continue weighing on Apac real estate investment volumes.The Asia Pacific (Apac) region has seen some expansion in cap rates in the first quarter of 2024, as real estate investment volumes have remained relatively subdued.
Capitalisation rates (cap rates) in the Asia Pacific (Apac) region saw some expansion in 1Q2024 as real estate investment volumes remained relatively subdued. This is according to a May research report by CBRE, which revealed a 14% year-on-year dip in real estate purchasing activity to US$24 billion ($32 billion) last quarter.
Japan was the most active market, with approximately 30% (US$7.4 billion) of total regional volume generated in the country. However, CBRE attributes the muted Apac investment market to investors remaining cautious due to delayed cuts in interest rates.
Regarding cap rates, most Asian markets remained stable, while Australia and New Zealand underpinned movements in the region, according to a separate research report by Colliers. In 1Q2024, cap rates in cities across both countries registered growth, particularly in the office and industrial sectors.
The office sector experienced the most growth in cap rates across Apac, driven by Australia, New Zealand, Beijing, Shanghai, and Jakarta. However, Colliers notes that Australian office transaction activity remained muted in 1Q2024, following a 72% drop in transaction volumes last year. Therefore, it believes the slow sales signal a softening of office cap rates in the country.
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Looking ahead, the delayed rate cuts and limited risk appetite among investors are expected to continue weighing on Apac real estate investment volumes. While investment markets in Japan, India, and Singapore remain robust, CBRE believes the recovery in other major regional markets has been pushed back to late 2024 or early 2025.
Amid this environment, cap rates are expected to continue rising over the next six months. CBRE forecasts cap rate expansion across most asset classes, with a higher magnitude of growth expected for decentralised and secondary assets.
“Investors should target buying opportunities in the second half of 2024 and focus on prime assets,” advises Greg Hyland, CBRE’s head of capital markets for Asia Pacific. “This will support deal closure as purchasers aim to take advantage of pricing discounts before rate cuts arrive.”
Henry Chin, global head of investor thought leadership and head of research at CBRE, notes that hotel and multifamily assets remain in demand among investors, along with prime assets in core locations across all asset types. On the other hand, the delays in rate cuts are expected to continue weighing on Apac real estate investment volumes.
In 1Q2024, the Asia Pacific (Apac) region saw some expansion in cap rates as real estate investment volumes remained relatively subdued. However, the delays in rate cuts are expected to continue weighing on Apac real estate investment volumes. This is according to a research report by CBRE, which revealed a 14% year-on-year dip in real estate purchasing activity to US$24 billion ($32 billion) last quarter. Japan was the most active market, with approximately 30% (US$7.4 billion) of total regional volume generated in the country.
In terms of cap rates, most Asian markets stayed stable, while Australia and New Zealand underpinned movements in the region, according to a separate research report by Colliers. Cap rates in cities across both countries registered growth in 1Q2024, particularly in the office and industrial sectors.
Among the different market segments, the office sector registered the most growth in cap rates across Apac, bolstered by Australia and New Zealand cities, along with growth in Beijing, Shanghai, and Jakarta. However, Colliers notes that Australian office transaction activity remained muted in 1Q2024, coming off the back of a 72% drop in transaction volumes last year. As such, it believes the slow sales signal a softening of office cap rates in the country.
Looking ahead, the delayed rate cuts, coupled with investors’ limited risk appetite, are expected to continue weighing on Apac real estate investment volumes. While investment markets remain robust in Japan, India, and Singapore, CBRE believes the recovery in other major regional markets has been pushed back to late 2024 or early 2025.
Amid this environment, cap rates are expected to continue rising over the next six months. CBRE is forecasting cap rate expansion across most asset classes, with a higher magnitude of growth expected for decentralised and secondary assets.
“In 1Q2024, the Asia Pacific (Apac) region saw some expansion in cap rates as real estate investment volumes remained relatively subdued,” says Greg Hyland, CBRE’s head of capital markets for Asia Pacific. “However, the delays in rate cuts are expected to continue weighing on Apac real estate investment volumes. As such, investors should target buying opportunities in the second half of 2024 and focus on prime assets. This will support deal closure as purchasers aim to take advantage of pricing discounts before rate cuts arrive.”
In 1Q2024, the delays in rate cuts were expected to continue weighing on Apac real estate investment volumes. However, the Asia Pacific (Apac) region still saw some expansion in cap rates as real estate investment volumes remained relatively subdued. This is according to a May research report by CBRE, which revealed a 14% year-on-year dip in real estate purchasing activity to US$24 billion ($32 billion) last quarter. Japan was the most active market, with approximately 30% (US$7.4 billion) of total regional volume generated in the country.
In terms of cap rates, most Asian markets stayed stable, while Australia and New Zealand underpinned movements in the region, according to a separate research report by Colliers. Cap rates in cities across both countries registered growth in 1Q2024, particularly in the office and industrial sectors.
Among the different market segments, the office sector registered the most growth in cap rates across Apac, bolstered by Australia and New Zealand cities, along with growth in Beijing, Shanghai, and Jakarta. However, Colliers notes that Australian office transaction activity remained muted in 1Q2024, coming off the back of a 72% drop in transaction volumes last year. As such, it believes the slow sales signal a softening of office cap rates in the country.
Looking ahead, the delayed rate cuts, coupled with investors’ limited risk appetite, are expected to continue weighing on Apac real estate investment volumes. While investment markets remain robust in Japan, India, and Singapore, CBRE believes the recovery in other major regional markets has been pushed back to late 2024 or early 2025.
Amid this environment, cap rates are expected to continue rising over the next six months. CBRE is forecasting cap rate expansion across most asset classes, with a higher magnitude of growth expected for decentralised and secondary assets.
“Investors should target buying opportunities in the second half of 2024 and focus on prime assets,” advises Greg Hyland, CBRE’s head of capital markets for Asia Pacific. “This will support deal closure as purchasers aim to take advantage of pricing discounts before rate cuts arrive.”
Henry Chin, global head of investor thought leadership and head of research at CBRE, notes that hotel and multifamily assets remain in demand among investors, along with prime assets in core locations across all asset types. On the other hand, the delays in rate cuts are expected to continue weighing on Apac real estate investment volumes.