Navigating uncertainties, APAC property sector shapes a narrative of growth
Colliers Singapore expert reports on how Asia Pacific property markets fare amid changing dynamics.
Asia Pacific property market emerges as top performer globally, reports Henry Chia, Director, Enterprise Clients, Asia Pacific, Colliers Singapore.
The Asia Pacific property market has showcased remarkable resilience throughout 2023, positioning itself as a standout performer on the global stage.
With office occupancy levels averaging between 65% and 80%, the region has outperformed both European and North American markets, said Henry Chia, director for enterprise clients in Asia Pacific at Colliers Singapore.
Speaking to the Singapore Business Review, Chia said: “Despite the stronger rebound in occupancy levels compared to other regions, global uncertainty continues to influence occupiers’ decisions.”
He emphasised the significant role that specific market demand and supply fundamentals play in shaping distinct recovery profiles across various APEC office markets.
Focusing on Singapore, Chia revealed a net absorption rate exceeding the historical average by 30%, with falling vacancy rates, underlining its unique market dynamics.
Korea, on the other hand, has experienced a landlord-favorable market due to limited supply over the past year, resulting in remarkably low vacancy rates of 2.3%.
Chia said key markets like Hong Kong, Mumbai, and Melbourne are expected to show signs of recovery and stabilization by the year’s end.
In contrast, he believes Tokyo may experience downward rent pressure due to persistently high vacancy numbers.
For China, the market presents higher vacancy levels and weaker demand, projecting reduced rents in cities such as Beijing and Shanghai.
Markets like Seoul and Sydney, which are witnessing growth, are poised to see the rate of expansion taper, though remaining positive.
Despite the underlying demand maintaining a net neutral state, Chia noted that expansionary activities within specific sectors and markets are counterbalanced by contraction activities, particularly in the tech sector.
Overall, a modest increase in vacancy levels is projected for the remainder of 2023, though not reaching the levels seen in 2020 or 2021.
When asked about the shifts observed in the market concerning occupiers and landlords, Chia pointed out significant trends. “Tenants are seeking opportunities for change, focusing on better quality buildings and improved locations to attract and retain talent,” he said.
He also highlighted how tenants are repositioning their assets to align with evolving work patterns, with investments in physical spaces, collaborative areas, and technology implementation to enhance remote work productivity.
Looking ahead to 2024, the expert at Colliers anticipates a trend in which occupiers will maintain an advantageous position to negotiate rents, pressuring landlords to enhance asset values to cater to tenant needs and preferences.
This shift could lead to increased competition among landlords to create tenant-friendly environments that foster collaboration and productivity.
So, as the region continues to navigate uncertain global conditions, it remains poised for growth and transformation, with occupier demands and landlord strategies evolving to shape the trends of 2024.
For more updates on Asia's business landscape, visit sbr.com.sg.