Property investors in Asia say they are positive in their outlook for the region, according to an expansive new study from the Urban Land Institute. But when asked for specifics on their plans for 2022, they in fact show weaker sentiment about prospects than last year. They are perhaps brow beaten by the persistent economic problems caused in Asia by coronavirus disruptions, and demonstrate a persistent "safety-first" streak that will discourage risk-taking.
Out of 22 Asian cities -- all the biggies, basically -- institutional investors see "generally good" conditions in only six: Tokyo, Singapore, Sydney, Melbourne, Seoul and Osaka. That's down from nine in last year's analysis. Those are also the safest gateway cities -- no one gets fired for investing there.
Conditions are "generally poor" in three: Kuala Lumpur, Manila and Bangalore. That's also an increase from only one last year (Hong Kong). Hong Kong would normally fit in the "safe" category but its record-high property prices have clashed with recession and Beijing's clampdown on the city's freewheeling culture, denting its prospects. It rates "fair" and middling status going into next year.
The remaining 13 Asian capital cities or business hubs have only "fair" prospects for 2022. Top-tier Chinese cities such as Shanghai, Shenzhen and Guangzhou have been insulated from the coronavirus, so far, due to China's harsh zero-tolerance total lockdown strategy. They score toward the higher end of the "fair" range. Southeast Asia and India, battered by waves of coronavirus scares, have more pessimistic prospects. It's noteworthy that eight Asian megacities are rated worse than Hong Kong, which still hasn't shaken off its main concerns.
That's all according to the ULI Emerging Trends in Real Estate Asia Pacific report for 2022, which just came out today. I'll fess up and admit that I was one of three contributing writers on previous editions. But I had nothing to do with this year's instalment. You can find the 2022 report here.
It's worth checking out for anyone interested in what property investors are thinking going into 2022. It really polls the "smart money," a Who's Who of institutional investors active in Asia, who are surveyed anonymously and also interviewed, again on a no-names basis so they can speak more freely.
Asia has far more "dry powder" in the keg than other parts of the world among Asia-based but globally-active institutional investors. A full 4.0% of the allotted allocation has not been made in Asia, compared with only 0.6% of the allocation yet to be invested in the Americas, and the allocation to Europe being fully deployed. That means only 7.5% of an intended 11.5% allocation to Asia is already in play. There's a lot of money waiting in the wings.
Investors rate industrial and warehouse space as having the best prospects in 2022, followed by multifamily residential and then new-for-sale housing. Office, once a mainstay of many a portfolio, has slipped far down the list of prospects and priorities, while investors remain very pessimistic about hotels and retail, as they have since the onset of the pandemic.
Niche sectors such as data centers, life-sciences property, shared office space and senior housing enjoy strong support. Besides "new economy" space, investors are also looking at decentralized properties away from traditional central business districts, as companies create hub-and-spoke structures or look to house smaller, decentralized teams. Companies involved in the "digitization" of the economy can often choose where to base themselves, picking locations away from the highest rents and nearer to people's homes.
With office rents plunging virtually across the board in Asian cities, property owners and landlords are changing their emphasis. Sydney has seen the greatest discounting, with rents down 17.8% year-on-year, but Bangkok (11.3%), Tokyo (10.8%), Hong Kong (10.1%) and Beijing (9.6%) have all seen significant office-rent descents.
One office landlord in Tokyo says the emphasis has switched from maximizing yield to sustaining dependable cash flow. "We've taken a bit of speed off the fastball," the landlord says in the report. If a tenant is enjoying a rent that's significantly below market rates, the landlord used to pressure them to pay up or force them to leave. The landlord accepted there would be a "year or two of transition" to get the space up to full face value on rent.
"We don't want to do that now because tenants aren't making very dramatic decisions, so once you have a relatively large vacancy in your building, it becomes kind of hard to fill it up," the landlord explains.
In last year's Emerging Trends report, investors were very clear that they expected a wave of distressed assets to hit the market in Asia. That did not happen. Despite falling rents, capital values for Asian property have generally remained firm. Going into 2022, only 10.0% of investors expect "significantly higher" returns from distressed investments, down from 17.7% last year. The ratio is also lower for investors who expect "somewhat higher" gains from distressed plays, at 26.3% of respondents looking at 2022, down from 32.3% heading into this year.
One reason is that banks have remained supportive, and been unwilling to pressure nonperforming loans, particularly in Japan and Australia, where the government implied that banks should provide forbearance to major borrowers.
The main prospects for distress now are in China, thanks not to Covid but to the government's forced deleveraging that has pushed developers such as China Evergrande Group (HK:3333) (EGRNY) to the brink of default.
There's also distress in India, where a regulatory crackdown on grey-market borrowing fed into a horrendous Covid epidemic. This has been a "trial by fire" for Indian residential developers, the ULI report states, bringing many poorly-run or underfunded developers to their knees.
Asia should have the best economic prospects once Covid concerns are behind us. With Asian representing 35% to 40% of the investable universe for commercial real estate, it's not a region that global investors can ignore. But it will continue to be tricky to read in 2022, and even harder for investors to find reasonably priced property plays in the year ahead.
"asian" - Google News
November 24, 2021 at 06:34PM
https://ift.tt/3oVb8Ql
Institutional Property Investors Skittish About Asian Prospects in 2022 - RealMoney
"asian" - Google News
https://ift.tt/2STmru2
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
No comments:
Post a Comment