2024 Outlook: Regional Experts Projects Emerging Risks & Opportunities in Asia-Pacific Real Estate Market

• 24 December 2023
• International News
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As we approach 2024, the Asia-Pacific real estate scene is evolving amid emerging market realities. Investors are strategically focusing on resilience, delving into a complex yet promising market for astute opportunities. This is according to regional experts at Asian Investor, who provided a joint analysis on 19 December 2023.

Market Insights:

Valuations are settling, and sentiment is improving, leading to a shift in momentum within capital markets.​ Michael O’Brien of QIC Real Estate emphasizes that successful investors filter distractions, recognize trends, and make thoughtful decisions.

“Successful investors will be those who can filter out distractions, recognize trends, and make thoughtful decisions that weigh risks against potential rewards,”​ said Michael.

Louise Kavanagh, CIO of Nuveen, warns of elevated financing costs despite interest rate cuts, predicting a modest return of investment appetite in 2024.

“Even with interest rate cuts, financing costs are expected to stay elevated at decade-high levels, underpinning an ongoing dislocation in pricing expectations,” warns Kavanagh.

Navigating Risks:

James Kemp at Macquarie Asset Management highlights the need to understand sub-market dynamics, emphasizing potential risks in monetary policy timing.

“The big macro risk is that monetary policy timing is off,” warns Kemp, “resulting in a sharp slowdown in global and regional growth impacting asset net operating incomes.”

ESG and Regional Considerations:

Amélie Delaunay at ANREV underscores the rising significance of ESG factors, with climate risks adding complexity to investment decisions.

Climate risks, according to Delaunay, have the potential to impact property values and insurance costs, adding a layer of complexity to investment decisions.

Opportunities in 2024:

Cuong Nguyen, Head of Asia Pacific Investment Research at PGIM Real Estate, projects opportunities in logistics, office sectors, rental housing, and data centers.

“The opportunity set remains broad, ranging from a mature residential market in Japan to co-living in Hong Kong and Singapore, and a fast-growing build-to-rent sector in Australia,” states Nguyen.

Future Amidst Uncertainties:

Regina Lim at M&G Real Estate emphasizes risks in the recovery trajectory of China and its repercussions for the Asia-Pacific economies.

Despite promising prospects in Australia and South Korea, caution is advised for Japan, with potential rises in real estate debt costs.

“While distress in APAC markets has so far remained at bay, it is likely a matter of time before we see forced sellers with refinancing due over the next couple of years,” concludes Lim.

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