redirect pin user minus plus fax mobile-phone office-phone data envelope globe outlook retail close line-arrow-down solid-triangle-down facebook globe2 google hamburger line-arrow-left solid-triangle-left linkedin wechat play-btn line-arrow-right arrow-right solid-triangle-right search twitter line-arrow-up solid-triangle-up calendar globe-americas globe-apac globe-emea external-link music picture paper pictures play gallery download rss-feed vcard account-loading collection external-link2 internal-link share-link icon-close2


Asia Pacific Market Outlook Soundbites


Dr. Henry Chin, Global Head of Investor Thought Leadership, Head of Research, APAC

Leo Chung, CFA, Associate Director, Research, APAC

Okubo Hiroshi, Head of Research, Japan

Abhinav Joshi, Head of Research, India




Investment activity and deal flow experienced significant disruption in H1 2020. However, sentiment began to recover in H2 2020, with investment volume subsequently increasing by 44% from the first six months of the year. Purchasing activity is set to gain further momentum in 2021, with CBRE’s 2021 Asia Pacific Investor Intentions Survey finding that around 60% of investors in the region intend to purchase more real estate this year than they did in 2020, the highest level since 2016.

While many investors continue to seek discounts, office prices remain resilient, with Hong Kong SAR the only market to register a significant correction. In the logistics sector, robust demand will continue to compress yields across most markets this year. Although both the retail and hotel sectors have seen a sizable price correction, investors retain a cautious stance towards these asset classes due to the poor outlook for income streams. Low for even longer interest rates and substantial liquidity will ensure landlords maintain current pricing over the course of 2021.

Figure 20




Assets available from fund expiries

CBRE data show that the expiration of Asia Pacific-focused close-ended real estate funds will peak in 2021-2022, with funds worth a Gross Asset Value (GAV) of about US$31 billion due to reach cessation. Among these funds, 20 funds with a GAV of close to US$10 billion have options to extend their fund life.

Funds approaching a hard deadline for expiry are mostly located in China, India and Australia and primarily possess retail and some office properties, along with a few hotels in Southeast Asia. With these funds under pressure to offload assets upon expiry, there will be opportunities for investors to negotiate attractive pricing.

Figure 21

Disposals by developers

Developers were net sellers in 2020, with many groups disposing of assets to repay debt or recycle capital for future investment. With this trend expected to continue in 2021, investors are advised to target developers in Singapore, Australia, Hong Kong SAR and Japan looking to repatriate capital.

Debt repayment pressure will continue to compel developers in Mainland China to offload investment properties and development projects. The “Three red lines policy” requires developers breaching debt limits to lower their gearing ratio, essentially forcing them to explore other channels to generate capital. Several such developers have already raised capital by listing their property management arms or disposing of properties. The People’s Bank of China’s (PBOCs) recent move to cap bank lending for property development and mortgage loans will create additional challenges for Chinese developers to secure financing, leading to create private debt opportunities for non-bank lenders.

Figure 22

Sale leasebacks

The widespread disruption resulting from lockdown measures and other restrictions severely impacted business activity across the region in H1 2020. While these restrictions were gradually loosened in H2 2020, a resurgence in infections and the nascent stage of economic recovery are likely to encourage companies to unlock liquidity by monetising real estate assets via sale leaseback deals.

Australia and Japan will continue to account for the bulk of sale leaseback activity in 2021. In the latter, CBRE is aware of several high-end retailers looking to sell flagship assets with long term leases.

Selected companies in certain industries with liquidity needs, particularly the energy, industrial manufacturing, logistics freight forwarding, raw materials and commodities sectors, are likely to display a greater willingness to realise real estate value, such as by engaging in sale leaseback transactions.

Table 1

Price dislocation in the public sector

While real estate pricing in the unlisted market has held relatively firm since the onset of the pandemic, the listed market has offered investors opportunities to access value discounts. Although recent positive news around vaccine development has pushed up prices in selected public markets, there remain several Asia Pacific listed REITs that continue to trade below their Net Asset Value (NAV).

Several major office-focused REITs and multi-sector focused REITs listed in Japan and Australia possess good quality portfolios. In 2020, some REITs in these markets disposed of properties to realise asset value. Should their NAV remain at a discount, REIT managers may review portfolios and consider disposing of assets to repay debt or reinvest into other opportunities.

Figure 23

click to enlarge




With the pandemic having accelerated demand for sectors such as industrial and logistics, and causing significant disruption to others including retail and hospitality, CBRE believes 2021 provides an opportune moment for investors to review their positioning across key asset classes.

Office: Target the price correction in gateway cities

While office demand will undoubtedly be impacted by the adoption of remote working, pressure to reduce office footprint is weaker in Asia Pacific compared other parts of the world. CBRE Asia Pacific’s Office Occupier Flash Survey found that while 46% of respondents expect a reduction in their office portfolio over the next three to five years, around 22% believe that they will increase their office portfolio over the same period. Investors appear to hold similar views, with half of respondents to CBRE’s 2021 Asia Pacific Investor Intentions Survey stating that they expect office portfolios to contract by under 10% over the next three years.

CBRE recommends investors focus on gateway cities undergoing a price correction. Potential targets include Hong Kong SAR, Shanghai, Sydney and Melbourne, where capital values are forecasted to decline by more than 10% from 2019 to 2021. While rents are expected to remain under downward pressure in 2021, investors are advised to seek opportunities to acquire good quality office buildings before leasing activity picks up.

Figure 24

click to enlarge

Logistics: Upgrade ageing warehouses

Respondents to CBRE’s 2021 Asia Pacific Investor Intentions Survey ranked logistics as the most popular sector for investment for the first time on record, indicating that logistics assets will remain keenly sought after in 2021. Strong capital inflows to the sector since the pandemic have narrowed the yield spread with the office sector to just 30 bps globally and 75 bps in Asia Pacific. With further logistics yield compression expected in 2021, the spread is set to narrow even further.

Robust investment demand is leading to intense competition for modern completed assets, of which supply is limited. Core investors are therefore advised to capitalise on logistic developers’ and logistics services end-users’ shift to asset light strategies to acquire high quality logistics portfolios.

CBRE also sees prospects for value added and opportunistic investors to identify well-located older warehouses with upgrading potential. With prices for completed assets continuing to rise, greenfield and brownfield development of modern logistics facilities offers an alternative entry route to capture additional alpha.

Growing demand for last-mile fulfilment is set to create opportunities to convert underused suburban malls into last mile logistics facilities. CBRE has already observed selected investors in Japan exploring such opportunities amid intense competition for logistics sites.

Figure 25

click to enlarge

Hotel and Retail: Identify countercyclical plays

While hotel and retail properties have undoubtedly been hit hardest by the pandemic, investors should position themselves to prepare for a rebound in 2021 as the pandemic is contained, social distancing regulations are eased, and travel restrictions are loosened.

Asia Pacific hotel occupancy improved from 25% in April to 51% in November, supported by domestic visitors lured by staycation offers. However, regional and global travel remains highly restricted, with the International Air Transport Association (IATA) not expecting a full recovery in international travel until 2024.

With destinations dependent upon international and business travel taking longer to recover, investors should seek opportunities in markets with a large pool of domestic tourists, such as Japan, Mainland China and Australia. Recent hotel transactions in the latter have featured price discounts of 5% to 15%, while overall hotel prices in Asia have fallen from 2019 values within a range of 10% to 30%.

Although retail properties continue to face a long-term structural threat from the growth of e-commerce, CBRE believes that destination retail in Japan and Mainland China and neighbourhood retail in Australia offer attractive opportunities to investors willing to consider this sector.

Destination retail properties, which refer to shopping malls or developments hosting luxury stores, high-end dining and an upscale shopping experience, continue to attract affluent domestic shoppers and are performing well.

Neighbourhood retail developments’ proximity to and convenience for local residential catchments provide them with a strong advantage over e-commerce. Experienced retail investors with extensive management expertise are advised to capitalise on current low valuations to acquire neighbourhood malls with potential for upgrading and placemaking.

Figure 26

click to enlarge

Niche sectors: Form partnerships to access operational expertise

Investor interest in niche sectors will continue to grow in 2021, with CBRE’s 2021 Asia Pacific Investor Intentions Survey indicating stronger interest in data centres and cold storage facilities.

While recent years have seen a steady increase in data centre investment, operational risk and securing planning approvals remain a challenge, prompting investors to form partnerships with experienced data centre operators to minimise exposure. CBRE advises investors to target second tier data centre operators seeking to expand their scale and capacity in order to become tier one operators. Direct investment opportunities will also be available via disposals from telecommunication companies who look to monetize their assets.

Surging requirements for fresh food, medical products and upcoming vaccines will support robust demand for cold storage facilities. Food service distribution companies disposing of cold-storage facilities may offer opportunities to investors, while other entry routes include build to core and greenfield development owing to the continued shortage of modern cold storage facilities5.

5Asia Pacific Cold Storage – An Investor’s Guide, CBRE Research, 2019.

Figure 27
Figure 28

Asia Pacific Real Estate Market Outlook 2021

Data Dashboard

CBRE’s 2021 Asia Pacific Real Estate Market Outlook Online Data Dashboard provides dynamic delivery data for all sectors.

Learn More

Stay Connected

Read More


Greg Hyland
Head of Capital Markets
Asia Pacific
Capital Markets
+65 6224 8181
+65 9818 1537
+65 6225 1987
Dr. Henry Chin
Global Head of Investor Thought Leadership
& Head of Research, APAC
+852 2820 8160
+852 2810 0830