Real estate transactions to increase next year, Colliers predicts
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According to Colliers International's "2015 Property Outlook", the number of real-estate transactions in Asia will rise substantially next year, as an increase in supply begins to match a need for investors to bolster their holdings in the region.
“There is pent-up underlying demand from both occupiers and investors, primarily due to the lack of stock, and that will gradually be satisfied,” said Dennis Yeo, Colliers International’s interim chief executive officer for Asia.
One of the drivers behind that trend is that there are considerably more real-estate funds that will expire in 2015, leading to a greater number of willing sellers of institutional-grade real estate. At the same time, supply in terms of new stock is also on the uptick.
Globally, investors have re-examined their allocations and are set to devote more capital to Asia. They are currently under-allocated to the region and see the increase in affordable stock as an opportunity to redress that imbalance.
Outbound investment from Asia is likely to continue at a rapid pace, particularly from Chinese developers looking to diversify their holdings. But conditions will be tougher for Asian investors to put their money to work.
Most cities in the region are anticipated to see a recovery in growth. Colliers forecasts that growth in gross domestic product in the region will pick up more significantly, by an average of 40 basis points next year.
With more realistic levels of supply coming to market in Asia, Colliers predicts that some of the cooling measures introduced in the region will be relaxed. Prospective investors should welcome these changes, as they lower any liquidity risk.
Yields should remain compressed for prime assets in core locations, and the cost of borrowing is likely to edge up in 2015. As a result, investors will have to behave differently to achieve better returns. They will see neighbourhood malls and value-added opportunities such as repositioning or converting buildings as their key targets in the new year.
