CBRE Asia Pacific Investor Intention Survey 2021
Ho Chi Minh City - 01 February 2021 - CBRE’s 2021 Asia Pacific Investor Intentions Survey, which polled more than 490 Asia Pacific-based investors in November and December 2020, uncovered an increase in investor interest in Ho Chi Minh City, which ranked fifth as Asia Pacific investors’ most preferred market for investments. With the diversification of supply chains encouraging more manufacturing investment, industrial and logistics assets are keenly sought after.
Hang Dang, Managing Director, CBRE Vietnam, says, “Ho Chi Minh City has already been on the radar of investors in recent years, especially those who are looking to invest in Southeast Asia, as the city is viewed as having the potential for greater appreciation in property values and higher yields.”
Interestingly, investors who expressed interest in investing in Southeast Asia indicated that they are willing to pay more for real estate purchase. 39.4% of these investors are comfortable to pay more than 10% higher this year than what they are willing to pay in 2020, while 19.7% are willing to paying up to 10% higher.
In the search for returns, investors looking at Southeast Asia are turning to value-add and core assets, even though there are some who are starting to look at distressed assets. Industrial/logistics and office remain their preferred sectors, while the hospitality sector is gaining favour.
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Findings from Asia Pacific Investor Intention Survey report
60% of investors intend to purchase more real estate this year, the highest level since 2016. The higher purchasing intentions are a consequence of pent-up demand from 2020, when the abrupt, pandemic-induced economic downturn, travel restrictions and uncertainty about the pandemic’s duration sharply curtailed investment activity. In addition, there remains a substantial volume of dry powder (capital that is committed but unallocated) searching for yield and ready to be deployed into real estate.
Despite ongoing travel restrictions, more than 70% of respondents intend to purchase overseas assets in 2021, the bulk of which is expected to be within Asia.
Since the onset of the pandemic, CBRE has observed that many investors across Asia Pacific have adopted a two-tier investment strategy focusing on core or opportunistic/distressed assets.
Dr. Henry Chin, CBRE’s Global Head of Investor Thought Leadership and Head of Research, Asia Pacific, weighs in, “Stronger interest in core investment reflects investors’ greater emphasis on tenant credit and stable cash flows. Assets with a solid rent roll of three years or longer typically attract far more bidders than those lacking this type of security.
On the opportunistic front, investors continue to deploy capital into a range of development projects including build-to-rent schemes in the Pacific and speculative logistic facilities across both Asia and Pacific. Distressed assets are also now back on investors’ radar for the first time since the Global Financial Crisis, with opportunities emerging in Mainland China and India,” adds Dr. Chin.
Logistics was the most popular sector for investment as the pandemic-driven acceleration of e-commerce consumption boosted demand for this asset class. While interest in the office sector weakened, investors retain an optimistic view towards this sector, expecting a contraction in office purchasing activity of no more than 10% over the next three years.
Data centres received stronger interest as a surge in demand for video conferencing and other platforms to support remote working led to increased requirements for data storage. Cold storage, which saw substantially increased demand over the course of 2020, and real estate debt rounded out the list of the top three alternatives.