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

RISK – RETURN

It is a difficult time for investors. At one end of the spectrum, core assets remain in very high demand and continue to command a price premium. Capital growth prospects are muted and income growth prospects are mixed. This means that in a lower growth environment, total returns may come under pressure in the near term. At the other end of the spectrum, opportunistic investments may well now be “risk off”. Rather the middle ground is in mature markets and playing the middle field of “value add”. This could be improving asset ESG credentials and/ or taking some leasing risk. Indeed,

green accreditation of buildings in some markets, such as Hong Kong, is an opportunity to increase asset value. Analysis of wider return to office metrics has highlighted that high quality buildings in high-amenity locations are bouncing back faster and enjoying higher levels of occupancy. The overall “greening” of the industrial sector is another growth story to play out over the longer term. Also in that longer-term growth mindset, albeit higher up the risk curve, emerging markets in India and South East Asia continue to offer strong potential.

Asia Pacific is a diverse region and opportunities for investment exist between sectors and along the risk curve. Growth markets and growth assets remain available

FIGURE 4: WHERE IS THE BEST RISK / RETURN TODAY? (TOP 3 RESPONSES)

53%

16%

9%

within the current macro-economic environment.

Value-add Tier 1

Emerging economies

Development - developed markets

Source: Cushman & Wakefield

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