Major Asia-Pacific Real Estate Markets Perform Well Despite Inflation, Rising Interest Rates: Report

Most of the major real estate markets across the Asia-Pacific region continue to perform well in the third quarter, despite the loss of some growth momentum in the face of difficult macroeconomic conditions marked by high inflation and rising interest rates, according to a report by Colliers.

In India, investments into the commercial office sector saw a revival during January-September 2022, jumping 53 per cent from the same period last year. Overall, total investments in the Indian real estate touched $3.6 billion during January-September 2022, registering a hike of 18 per cent YoY, according to the report titled ‘Asia Pacific Market Snapshot | Q3 2022’.

Piyush Gupta, managing director (capital markets and investment services) of Colliers India, said, “The capital inflows in Indian real estate continue to flow in, as long term sustainable growth story remains intact. Further, trend in residential sales is reflective of positive long-term structural change in the sector. Investments in India are getting more broad based with increased participation from domestic investors.”

He added that the newer avenues are evolving like fractional ownership, AIFs, pooled investment structures are being developed providing depth to both investors and developers.

Rising absorption rates in the residential, office and logistics segments underlined the buoyancy in India’s real estate market. Investments into the office sector accounted for almost half of the total investments. India’s commercial office segment is back on investors’ radar led by increased occupier confidence in the market.

Colliers said that during 2022, office leasing is likely to cross 50 million square feet across the top six cities, surpassing the highs seen in 2019. At the same time, the residential sector has also performed well, led by high inclination to own homes, comparatively low interest rates and the offers during the festive season. The industrial and logistics segments will be supported by the planned influx of nearly $20 billion in investments into the manufacturing sector.

Vimal Nadar, senior director (research) of Colliers India, said, “Overall, domestic investors have become more active in the market, accounting for about 18 per cent of the investments between January-September 2022, from 14 per cent share last year. At the same time global investors continue to dominate funding activity with higher participation in entity-led deals. However, global investors are on a wait-and-watch mode untill recessionary pressures persist.”

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