The Asia-Pacific region is set to remain the world’s fastest-growing region, despite ongoing stressors exacerbated by the Russia-Ukraine conflict and global financial volatility. Even as growth momentum continues to normalise across much of the region, domestic-oriented economies such as emerging Southeast Asia and India are forecast to remain supportive of overall regional growth in the upcoming year, according to Knight Frank’s latest report, Asia-Pacific Outlook Report 2023: Pivoting Towards Opportunities.
“With much of the known risks largely priced in and likely to have overshot on current negativity, there remains scope for fundamentals to surprise on the upside, underpinned by the marginal easing of zero-COVID strategy and the lower-than-
expected terminal interest rates. As of late, Chinese authorities have lowered the duration of quarantine for inbound travellers, a step in the right direction that could set the tone for more calibration and an eventual exit in 2023/2024. We can afford to be sanguine given that nascent signs of inflation peaking have crept into the Fed’s data watch,” said Christine Li, head of research, Asia-Pacific.
“While it remains to be seen if these can be sustained, the prevailing macroeconomic and policy uncertainties, once rolled
back, will narrow bid-ask gaps and pave the way for higher investment activity.” At a sector level, the report predicts that the market conditions in 2023 will continue to favour tenants as highly-amenities office buildings with sustainable credits are being completed and ready for occupancy. Rents in the logistics sector are forecast to increase by 5.5%, while office rents will rise by 2% across the region.
Overall, real estate offers good diversification benefits with a relatively low correlation to equities and bonds. Therefore, risk-
adjusted returns for direct real estate are unlikely to re-price to the same extent as indirect.
“While the Asia-Pacific economy will face significant headwinds in 2023, it will remain a bright spot amid the shadows cast
by the slowing global economy. Economies in the region will once again dominate growth worldwide, which will have
implications for its real estate markets. That underlying growth will continue to underpin its attraction to occupiers, while its
economic diversity offers ample opportunities for investors to target a range of asset classes to position their portfolios for
the post-pandemic landscape,” Kevin Coppel, managing director, Asia-Pacific added.
“The global macroeconomic headwinds will impact upon Malaysian markets. However, we are still hopeful that the newly-
elected unity government will be able to outline clear and consistent policies in driving economic investments into our country, and encourage all direct measures to revitalise and sustain the growth of the property sector. Malaysia needs to bring back investors’ trust and faith in our economic growth, in order to see recovery across all sectors,” Sarkunan Subramaniam, Group Managing Director, Knight Frank Malaysia shared his comments on the challenge and opportunity that might affect economic growth in Malaysia.
“We hope for the government to introduce “green incentives” to property buyers, landlords, and developers who are aligned
with the nation’s target of becoming a “net zero” nation by 2050. We encourage an extension of existing incentives to
incorporate tax reliefs/grants to industry players who include green features in their developments, especially renewable
energy like solar panels and water harvesting, as well as sustainably-built properties from timber and low-carbon cement in
place of high-emission materials.
It’d be wonderful to see these incentives being extended to property buyers who purchase “green homes” with “green features” – thereby addressing the high capital outlay that is required in order to ensure a sustainable future,” Keith Ooi, Deputy Managing Director of Knight Frank Malaysia also highlighted the key initiative on his wish list in driving the property sector forward.
