2021 ULI Asia Pacific Summit: Quick Takeaways
Key takeaways from session highlights on Tuesday and Wednesday, 25–26 May 2021.
HONG KONG (31 May 2021) – Asia Pacific’s key real estate markets are likely to witness a sustainable and resilient recovery in the next three years, bouncing back from a recent weakness triggered by the spread of COVID-19, according to the inaugural Urban Land Institute (ULI) Real Estate Economic Forecast report for the region.
China is forecast to lead the pack with 8.75% of real GDP growth in 2021, followed by Singapore (6.1%), Hong Kong (4.7%), and Japan (3.0%). While economies in the region are expected to grow at a slightly slower pace in 2022 and 2023, signs of continuing recovery remain as unemployment rates are expected to continue trending downwards across the four key markets surveyed, which focused on Hong Kong, Shanghai, Singapore and Tokyo.
Against this upbeat backdrop, real estate in the four cities is likely to experience a rebound as well, with bright spots in the office and logistics spaces. Although office vacancy rates are expected to expand at a slightly slower rate for the next three years, according to an office MSCI index, Singapore’s and Tokyo’s office sectors are estimated to return 3.59% and 3.1% respectively before accelerating to 8.63% and 4.3%. A rapid shift towards e-commerce also continues to support demand for logistics assets, with rental rates estimated to grow 2.75% in Hong Kong in 2022, the highest of the four key markets surveyed. The outlook for the retail sector remains downbeat this year, with rental rates projected to decline in Singapore and Shanghai as well as Hong Kong.
At the onset of the pandemic in 2020, substantial declines were seen in the inflation rates of the four markets studied, with Hong Kong and Japan dipping into negative territory. These are set to be reversed in 2021. Overall, medium-term inflation rates are projected to remain stable and subdued, rising very gradually from 2.0%, 1.55%, 1.4% and 0.0% in 2021 to 2.05%, 2.5%, 2.0% and 0.55% in 2023 in Hong Kong, China, Singapore and Japan respectively.
David Faulkner, president of ULI Asia Pacific, said: “The latest ULI Real Estate Economic Forecast paints a bright outlook for the key economies and real estate markets in Asia Pacific, signalling the region’s resilience to the challenges posed by the pandemic. Even so, pockets of uncertainties remain as recovery would depend on the pace of the reopening of the global economy, as well as the re-emergence of the virus which may lead to another round of lockdowns.”
The ULI Real Estate Economic Forecast’s findings are based on a survey of economists and analysts at eight leading real estate and investment organisations, Aberdeen Standard Investments, AEW, Cushman & Wakefield, Heitman, JLL, Morgan Stanley, Nuveen Real Estate, and Phoenix Property Investors. It is also based on historic data provided by JLL, MSCI and Oxford Economics. The report takes a deep dive into the three-year forecast for key economic and real estate data points for Asia Pacific’s four major markets, Hong Kong, Singapore, China, and Japan.
Other projections from the forecast include:
About the Urban Land Institute
The Urban Land Institute is a non-profit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has over 45,000 members worldwide representing all aspects of land use and development disciplines. For more information, please visit uli.org or follow us on Twitter, Facebook, LinkedIn, and Instagram. ULI has more than 2,500 members in the Asia Pacific region. For more information on ULI Asia Pacific, visit asia.uli.org or follow us on Twitter, Facebook, LinkedIn and Instagram.
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