(3 December 2024, Hong Kong) Leading global diversified professional services company Colliers has today launched its 2025 Global Investor Outlook,finding renewed investor optimism and confidence that the commercial property market has moved past an inflection point following two years of muted transactions.
On the back of subsiding inflation, lower interest rates, an improved economic outlook and expansive fundraising, Colliers anticipates a new global market environment to emerge in 2025 – more diverse, by asset class and investor base, than the one it leaves behind in 2024.
The associated Asia Pacific Report: 2025 Global Investor Outlook reveals a local investment landscape gearing up for lower interest rate environment in many markets, following a prolonged inflationary period that kept many investors on the sidelines. Expectations of rate cuts, along with factors such as continued narrowing of pricing and valuation gaps, are expected to help drive transaction volumes in the APAC region.
“Strong economic fundamentals and a diverse range of lucrative asset classes will draw a growing number of international and local investors to Asia Pacific real estate markets in 2025,” Chris Pilgrim, Colliers’ Managing Director of Global Capital Markets, Asia Pacific, said.
“Optimism is rising in the APAC real estate market as interest rate cuts pave the way for increased transactions. With a narrowing pricing gap and growing investor interest in sectors like office and logistics, 2025 promises significant opportunities for cross-border investments and renewed market activity.”
Key APAC survey findings include:
- 69% of APAC survey respondents intend to allocate more than 30% of their total global assets under management (AUM) to real estate in the next five years.
- 68% expect regional economic growth to have a positive impact.
- 67% plan to invest in the region in 2025, as industrial and office sectors continue to be APAC investors’ top choice in 2025.
- 61% plan to invest in industrial and logistics, office and multi-family/build-to-rent sectors in 2025.
- 61% of APAC respondents planning to invest in the office sector intend to invest in core or core-plus CBD office assets.
- Nearly 90% expect their ESG-compliant office assets to achieve some value premium over the next three years.
“Logistics is very much a core strategy now for investors and it’s definitely become mainstream,” Mr Pilgrim said. “The biggest change we are seeing is that investors are more discerning in terms of the assets they’re targeting and more sensitive to where there’s rental growth, especially given the supply-demand dynamics. Investors are specifically targeting assets like data centers, last-mile logistics and cold storage, with interest centered in markets like Japan, Australia, and South Korea.
“There’s also a lot of demand for alternatives as investors look to diversify the way they invest in real estate. But the biggest challenge, not just in Asia Pacific but globally, is that there’s still a lack of investable grade assets in a lot of these sectors, whether it’s senior living or life sciences. We don’t expect supply to ramp up in 2025. But as future strategies they have really strong potential.”
“In the first half of 2025, institutional and property funds are anticipated to explore lucratively priced markets like Hong Kong and mainland China for value-driven investment opportunities. There’s a marked shift towards alternative assets, particularly student accommodation, bolstered by the government’s supportive policies aimed at attracting talent and positioning Hong Kong as an international education hub. These factors are encouraging for investors looking to capitalise on emerging opportunities in Hong Kong’s dynamic economic landscape,” commented Thomas Chak, Head of Capital Markets & Investment Services, Colliers Hong Kong.
Key global findings include:
- Return of momentum as interest rates retreat. Anticipated lower rates in 2025 are set to boost investor confidence and drive a resurgence in market activity.
- The pricing gap continues to narrow. Colliers expects this closer alignment in valuations to fuel higher transaction volumes.
- Geopolitics, inflation to shape sentiment. Clearer political landscapes boost confidence, but potential inflation and policy shifts could slow market momentum
- Office bifurcates between best and the rest. Prime locations are attracting capital, while secondary markets face challenges, creating opportunities for value-add investments through renovation and redevelopment.
- Developers face hurdles. High construction costs are discouraging some investors from taking on development risk, leading to low new supply.
- Data centres remain popular, but dependent on tech and energy trends. Due to their intense electricity needs, access to power and technical expertise is important.
- Family offices, generational wealth to be a greater presence, even as monetary easing assists debt-backed investors.
- Shift back from credit to equity. Amid deployment challenges with credit-led structures, Colliers expects a shift in capital back to equity and simpler structures like joint ventures, recaps, and M&A.
“We are seeing signs of positive momentum, with stronger sentiment growing as asset values stabilise,” Luke Dawson, Colliers’ Head of Global Capital Markets, said. “Stronger fundraising, including a return of core capital, will take time to flow through into deal volumes, though it is a strong indicator that more activity will hit the market soon. In conversations with investors around the world, now is the time to be laying the groundwork for the next few years of growth as the transactional market moves off the bottom of the cycle,”
To find out more, download the full report: via this Link.