Offices are the top choice for Asia-Pacific property investors in 2021, survey finds

KEY POINTS
  • Real estate investors in Asia Pacific are most likely to put money into offices in 2021, with 31% of respondents choosing the sector over other market segments in a recent survey.
  • That’s despite huge changes to workplaces following the coronavirus pandemic, such as work-from-home arrangements becoming the norm last year.
  • There is growing confidence that offices are still “very relevant,” though some believe that Covid-19 and remote working could bring about the “death of offices,” said Terence Tang of Colliers International.
Asia-Pacific’s Tier 1 city offices remain ‘asset of choice’ among investors: Colliers International
 

SINGAPORE — Real estate investors in Asia-Pacific are most likely to put money into offices in 2021, with 31% of respondents choosing the sector over other market segments in a recent survey.

That’s despite huge changes to workplaces following the coronavirus pandemic, such as work-from-home arrangements becoming the norm last year.

 

More than half of the respondents in Sydney and Melbourne said they like offices as an investment opportunity this year, along with 42% of Singapore’s survey respondents, according to property investment firm Colliers International’s Global Capital Markets 2021 Investor Outlook.

“In this uncertain environment, investors will prefer to deploy capital into lower risk opportunities,” said Terence Tang, a managing director at Colliers. “Tier one city offices remain the asset of choice,” he added.

Cities such as Sydney, Melbourne and Singapore offer “more stable investments with less volatile income returns” and high quality assets, he told CNBC’s “Street Signs Asia” on Tuesday.

An aerial view of Sixty Martin Place, Sydney, Australia.
An aerial view of Sixty Martin Place, Sydney, Australia.
Mark Syke | View Pictures | Universal Images Group | Getty Images

Additionally, offices that have long leases and tenants with “strong credentials” can probably ride out the unpredictability in the global economy, Tang said.

“If you believe that the office is here to stay and … you invest in good office assets which give you that security of income over this uncertain period of time, I think this is something that people like,” he said.

 

But he acknowledged that some think Covid-19 and remote working will bring about the “death of offices.”

Morgan Stanley last year predicted that office tenants in Asia could permanently give up between 3% and 9% of their office space.

Tang said it may be “premature” to write off offices.

“There is growing confidence that this asset class is still very relevant,” he said, adding that for many in the region, working from home for the long term may not be ideal.

“Especially in Asia where the homes are smaller, when you have a husband and wife in an apartment, and they’re trying to talk on their laptops … it’s not as conducive and they can’t focus,” he said.

Offices are also still “very much needed for collaboration and development of corporate culture,” he said.

Author:

CNBC

— CNBC’s Weizhen Tan contributed to this report.

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