20250521-莱坊-Asia-Pacific_Horizon_2025_Part_1_Charting_new_horizons_38页_1mb

Knight Frank Asia-Pacific Outlook Summary

Core Content

This document outlines the key economic, capital market, office, logistics, and residential trends shaping the Asia-Pacific region in 2025. It provides insights into macroeconomic conditions, investment dynamics, and sector-specific developments that are expected to influence real estate markets across the region.

Main Points

1.0 Economic Outlook

• Trump 2.0: Unknowns Multiplied
  The potential return of Trump to the US presidency introduces significant uncertainty, increasing risks for the Asia-Pacific region's GDP forecasts. This includes the likely increase in tariffs on Chinese exports, which could slow export and manufacturing-dependent economies and disrupt regional supply chains.

• Interest Rates: Lower but Cuts Will Be More Gradual
  Central banks in the Asia-Pacific are expected to lower interest rates in 2025, but the pace will be slower compared to the US. The Bank of Japan is projected to maintain a gradual tightening cycle, with a potential policy rate reaching 1.0% by 2026.

• More Stimulus in China as Trump 2.0 Begins
  China's economic growth is expected to slow in 2025 due to weak domestic demand, over-capacity, and challenges in the real estate sector. The Chinese government is likely to implement further fiscal and monetary stimulus to counteract potential downturns.

• Regional Powerhouses: Southeast Asia and India Boost Asia-Pacific Growth
  Southeast Asia and India are emerging as key growth drivers in the Asia-Pacific region. These markets are attracting manufacturing investments due to lower production costs, improving infrastructure, and a skilled labor force. S&P Global forecasts an average annual growth of 5.1% for Southeast Asia and 6.8% for India over the next three years.

• Inflation in Action with Japan Set for More Rate Hikes
  Japan's core CPI reached a seven-month high in November 2024, indicating persistent inflationary pressures. The Bank of Japan is expected to raise interest rates gradually, with a potential 25-bps hike in March 2025 and another by the end of the year. Japan's low policy rate continues to make it an attractive destination for foreign investors.

2.0 Capital Markets

• More Cross-Border Activity but No V-Shaped Recovery
  Cross-border real estate investment in the Asia-Pacific region saw a 64% increase in 2024, reaching US$48.8 billion. However, a sharp V-shaped recovery is unlikely due to ongoing macroeconomic uncertainties and geopolitical tensions.

• Office Investments Still Preferred Despite Challenges
  Office investments remained the most preferred asset class in 2024, with a 16.1% increase in investment volume. High occupancy rates and strong fundamentals support this preference, although market conditions vary across the region.

• Value-Add Plays a Key Differential Role
  Value-add investments have gained traction as investors seek to capitalise on the gap between obsolete buildings and premium spaces. These investments focus on income growth and cash flow-driven returns, with a notable increase in redevelopment and renovation opportunities.

• Rate Cuts Fail to Diminish Demand for Defensive Sectors
  Despite rate cuts, demand for defensive sectors such as data centres remains strong. These sectors offer resilience against macroeconomic fluctuations and are driven by emerging technologies and demographic trends.

• Expanding Investor Interest in Industrial Opportunities Across Emerging Economies
  There is growing interest in industrial real estate across emerging economies, particularly in markets with strong growth potential and strategic supply chain shifts.

3.0 Office

• Sustainability Debate Focuses on Impact as Deadlines Loom
  Sustainability is becoming a critical factor in office market dynamics, with increasing pressure on developers to meet ESG compliance standards and reduce environmental impact.

• Asia-Pacific Occupiers Turn to Data to Drive Optimisation
  Occupiers are leveraging data analytics to optimise their real estate strategies, focusing on efficiency and cost management.

• Tug-of-War Between Hybrid and Full Office Schedules to Continue
  The balance between hybrid and full office work arrangements is expected to persist, influencing demand and space utilisation in the sector.

• More Divergent Occupier Conditions Across Asia-Pacific
  Occupier conditions vary significantly across the region, with some markets experiencing stronger demand than others due to economic and policy differences.

• Increasing Adoption of Artificial Intelligence (AI)
  AI is playing an increasingly important role in the office sector, influencing both investment and operational strategies.

4.0 Logistics

• 'China +N' Strategies Take on More Urgency
  The push to diversify supply chains away from China is intensifying, leading to increased investment in logistics infrastructure across the region.

• Decarbonisation
  Environmental sustainability is becoming a central theme in logistics development, with a focus on reducing carbon footprints and adopting green technologies.

• Occupiers to Remain Selective on Expansionary Plans
  Despite growth opportunities, occupiers are adopting a cautious approach to expansion, prioritising efficiency and cost control.

• Technology as a Crucial Enabler
  Technological advancements are driving improvements in logistics efficiency, with automation and digital solutions playing a key role.

• High-Growth Industries Such as Electric Vehicles (EVs) Power Demand for Logistics
  The rise of high-growth industries, particularly EVs, is increasing the demand for logistics infrastructure, especially in markets with strong manufacturing and supply chain capabilities.

5.0 Residential

• High-End Residential Market Maintains Upward Momentum
  The luxury residential segment continues to show strong growth, driven by demand from high-net-worth individuals (HNWIs) and a focus on quality and sustainability.

• Still Eyeing Opportunities
  Investors are looking for opportunities in the residential market, particularly in emerging economies where demand is growing and supply is limited.

• Global Migration of High-Net-Worth-Individuals (HNWIs) a Key Driver of Market Trends
  The movement of HNWIs across borders is influencing residential market dynamics, particularly in the luxury segment, with a focus on branded residences and sustainable living.

• Luxury Residential Shifts Toward Branded Residences in Emerging Markets
  Branded residences are becoming more popular in emerging markets, offering exclusivity and a premium lifestyle.

• Increasingly for Homebuyers, Prime Will Also Mean Green
  Sustainability is becoming a key differentiator in the residential market, with prime locations also being associated with green and eco-friendly developments.