Asia’s accelerating economic growth and rising industrial output and retail sales all point to a positive outlook for the region’s real estate markets in 2014. In general, rentals are forecast to edge up due to tight supply of stock in the core locations of most Asian markets. In anticipation of sustained cost cautious sentiment in the market, both office and retail tenants are likely to adopt a strategy of decentralising to suburban areas and fringe business locations, where more real estate alternatives are available at lower cost.
In the capital market, Asia’s real estate yields are generally predicted to keep rising this year. Asian investors will be seeking to exploit the difference between the property cycles in Asia and the US and Europe, in order to achieve better yields and enjoy benefits of portfolio diversification. This explains the expectation of increase in outbound capital investments in the region.