Alternative real estate, proptech picking up steam in Asia Pacific
As real estate transaction volumes in Asia Pacific continue to build up, driven by continued momentum in core markets and increased interest in the region’s developing markets, several industry trends are shaping up, potentially changing the landscape of the region’s vibrant property market.
Based on data from leading real estate professional services firm JLL, Asia Pacific deals are seen to grow by five percent this year to reach up to $140 billion.
In 2017, Hong Kong recorded the world’s highest transaction for a single office block with the sale of The Center for $5.2 billion; hotel conglomerate Accor acquired Australian Mantra Group’s portfolio of serviced apartments for $1.2 billion; and CapitaLand Investment Trust bought Singapore’s Asia Square Tower 2 for $1.5 billion.
Looking ahead, JLL said one of the major trends that will shape the year to come is the growing preference for alternative real estate investments.
It said investors would seek opportunities in the alternative real estate sector such as aged care/senior housing, student housing, education, data centers, and self-storage facilities to diversify their portfolios and for long-term growth.
“We’re observing growing interest and a huge opportunity for alternatives in real estate,” said Megan Walters, head of research of JLL Asia Pacific. “Demand in these sectors clearly outweighs supply, and the demographic demand drivers in the region are growing quickly. Yields on self-storage facilities are attractive compared to other traditional asset classes, ranging from five to seven percent in Tokyo and Singapore, five to eight percent for Australia, and around eight percent in China and India.”
In addition, the convergence of property and technology – otherwise known as proptech – is seen as the latest disruptor in real estate and is likely to pick up steam in 2018. Asia Pacific proptech startups have already received $4.8 billion of the $7.8 billion raised by global proptech start-ups from 2013 to 2017.
Jeremy Sheldon, managing director of JLL Asia Pacific’s Markets and Integrated Portfolio Services, said in the long term, digitization of services, Internet of Things (IoT) adoption and automation would have a significant impact on corporate real estate strategy, team structures and processes.
“The introduction of IoT – smart systems and devices operating over a network – will drive greater transparency of real estate portfolio utilization and performance. Smart buildings will help both building owners and occupiers improve performance and save costs,” he said.
While managing costs remains a priority for most businesses, so is access to talent. With organizations using the workplace to boost employee engagement and attract and retain talent, there would be a continued rise in companies using co-working spaces in many parts of Asia Pacific including the Philippines. Those that offer high-tech, personalized and innovative space offerings – such as collaborative workspaces, food and beverage, gyms and wellness areas – that create a human-centric experience will stand out and attract the best in the war for talent.
JLL Philippines country head Christophe Vicic is optimistic on the outlook for the Philippines. “We see the real estate industry growing throughout the region, and it is no different here in the Philippines. Even the way we design offices now have an impact on how we recruit top talent. We’ve seen how companies here invest to get the best of the best, and the pace at which real estate is changing is nothing like we’ve seen before. It’s a very exciting time to be in this industry.”