PART 2: The Capital

R E S E T 2 0 2 2

PA R T 2 : T H E C A P I TA L

DATA CENTRES The new, emerging asset class in Asia Pacific, indeed globally, is the alternatives sector. Data centres are now firmly on many investors’ radars, with total investment volume in stabilised assets growing from USD1bn in 2016 to over USD6bn in 2021. But while they may have captured mainstream attention, they remain at less than 10% of office investment volume and a considerable proportion of this is entity

MULTIFAMILY AND “LIVING ASSETS”

level activity. This sector, which used to be hard to get into and hard to get out of, is now even harder to get into, especially as fewer owners are looking to exit. This is not only a function of the sector’s long-term attractiveness but also a wider shift within commercial real estate investing to funds that would typically see underwriting of an extended duration (e.g. Open Ended Funds & REITs). This is illustrated by the open-ended real estate fund sector, as seen in the growth of the ANREV ODCE index, which has grown from 6 funds, 181 properties and a gross asset value of USD12.9bn in Q4 2019 to 8 funds, 355 assets and a gross asset value of USD21.4bn in Q4 2021. This may mean fewer assets available on open-market transactions and more assets trading between related parties. Within the data centre market specifically, investors will need to increasingly focus on partnering with developers and operators to develop their own product.

student visas were granted in Australia – reflecting a strong uptake in visas during the six months after Australia’s international borders reopened to students in December 2021. SAME TIME RECOGNISE THAT WHILE THEY HAVE ATTRACTED MAINSTREAM ATTENTION, THEY ARE STILL A COMPARATIVELY SMALL PROPORTION OF OVERALL INVESTMENT VOLUME. DO LOOK TO INCORPORATE ALTERNATIVES IN YOUR ASSET ALLOCATION, BUT AT THE

The mature Japanese multifamily sector will be sought after for its stable occupier demand. Japan’s aged care sector, which is heavily fragmented, could also garner greater focus given the country’s ageing population. Elsewhere in the region, the Australian build-to-rent market is set to expand rapidly with over 14,000 units currently planned for development. However, given its nascent nature, there are unlikely to be transactional opportunities for stabilised assets in the near term. Running alongside this, the more mature Australian purpose-built student accommodation (PBSA) sector appears to be recovering strongly. In the year to June 2022, almost 230,000

FIGURE 2: MULTIFAMILY OVERTOOK ALL OTHER ASSET CLASSES IN THE U.S. TO BECOME THE LARGEST ASSET CLASS BY TRANSACTION VOLUME. WILL THIS HAPPEN IN ASIA PACIFIC?

Yes - 2 years

Yes - 5 years

Yes - 10 years, Japan largest

Yes - 10 years, China largest

Yes - 10 years, India largest

Never / Not within 10 years

0%

10%

20%

30%

40%

Source: Cushman & Wakefield

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