News roundup: APAC’s property investment increases 13 percent in Q1 2024, and other stories

For PropertyGuru’s real estate news roundup, the Asia Pacific region was the sole global area to experience an increase in commercial real estate investment in the first quarter of 2024. In other updates, surging inbound tourism will help boost Australia’s hotel occupancy levels this year and next. And outside Metro Manila, Cebu remains the top choice for outsourcing firms and multinational companies in the Philippines.

Asia Pacific commercial property investment leads the world, spikes 13 percent

New data from the global real estate consultancy JLL, as reported in The World Property Journal, indicates that the Asia Pacific region was the sole global area to experience an increase in commercial real estate investment in the first quarter of 2024, with investments hitting USD30.5 billion. This represents a 13 percent rise year-over-year and is the second consecutive quarterly increase after a slump lasting seven quarters.

This investment growth is in the context of significant acquisitions by global investors and continued capital deployment by institutional investors. Leading the charge in the region, North Asia saw significant activity, particularly Japan, which was the most active market with USD11.5 billion invested – a 29 percent increase YoY. In Japan, domestic investors mainly targeted core assets, while international investors were drawn to more opportunistic ventures. The interest from overseas in Japan remained robust, spurred by favorable financial conditions, appealing yield spreads, and a weaker currency, with substantial investments flowing into offices, logistics, and industrial sectors.

South Korea also saw a substantial uptick in investment, pulling in USD4.3 billion – a 73 percent increase YoY, predominantly in the office sector due to its solid fundamentals, low vacancy rates, and strong leasing demand. Singapore saw investments of USD2.2 billion, marking a 14 percent YoY increase, with capital shifts favoring retail assets benefiting from optimistic rental projections and yield spreads. Conversely, Hong Kong experienced a sharp decline, with volumes falling to USD0.7 billion, a 54 percent drop YoY, highlighted by a notable transaction involving a local developer’s sale of a neighborhood shopping center.

Australia’s hotel sector tipped to benefit from occupancy and room rate growth as inbound tourism recovery gathers momentum

Surging inbound tourism will help boost Australia’s hotel occupancy levels this year and next while spurring room rate growth in most markets, particularly Sydney and Brisbane, according to new CBRE forecasts.

CBRE’s latest Hotels Australia Overview and Outlook report in The Hotel Conversation highlights that domestic travel in commercial accommodation across Australia surpassed pre-pandemic levels in 2023 in terms of both travel nights and spending across most states, despite an uplift in outbound international travel.

In the global gateway states of New South Wales and Victoria, domestic travel nights were up 5 percent and 13 percent respectively on the year prior.

CBRE’s Australian Head of Hotels Research Ally McDade said she anticipated a consolidation in the domestic tourism market throughout 2024 as last year’s outbound travel spike – which was driven by pent-up demand – began to moderate. “The high cost of overseas flights and accommodation combined with geopolitical tensions globally are expected to benefit the local sector. However, continued pressure on consumer sentiment due to interest rates and cost of living concerns are likely to present ongoing challenges,” Ms. McDade said.

The report shows that international visitation to Australia continues to recover, with some markets such as Nepal, Vietnam, Fiji, Ireland, and South Korea surpassing 2019 arrival numbers. However, there is still a gap to bridge, with short-term overseas arrivals 24 percent below pre-pandemic levels in 2023.

Overall Australian outbound travel on a short-term basis recovered to 88 percent of 2019 volumes in 2023, with closer regional destinations likely to benefit from continued growth.

The Philippines’ Cebu is still the top pick for outsourcing and multinational firms — Colliers

According to a report in BusinessWorld, Colliers Philippines has observed that outside Metro Manila, Cebu remains the top choice for outsourcing firms and multinational companies.

Cebu led in terms of office space take-up outside of the capital region in 2023, with a total of 65,800 square meters (sq.m.). Despite strong net take-up, vacancies remain elevated due to new supply, which is expected to persist through 2024. Colliers believes that shared services, healthcare companies, and other multinational firms will likely occupy more office spaces in this location. While rationalization of office real estate is still occurring, Colliers projects a slight increase in net take-up in 2024.

The persisting tenant-leaning market for Cebu should provide an opportunity for tenants to take advantage of the newer and better-quality office buildings, skilled labor pool, and improving infrastructure. Landlords should remain proactive in improving their occupancy and developing higher-quality buildings to address the demands of a more discerning tenant base.

The Property Report editors wrote this article. For more information, email: [email protected].