CBRE – Asia Pacific Real Estate Market Outlook, 2024

The Asia Pacific real estate market had a subdued year in 2023 due to factors such as high interest rates, slow recovery in mainland China, and geopolitical tension. However, CBRE predicts that the market will experience an upturn by mid-2024, with the theme of "A Tale of Two Halves: Headwinds Followed by Recovery." The U.S. economy is expected to have a soft landing in 2024, with inflation and the labor market softening. GDP growth in the Asia Pacific region is forecasted to slow to 3.5% from the previous year's 4.3%. The interest rate cycle in Asia Pacific is predicted to start declining in mid-2024, influenced by easing CPI-inflation and anticipated U.S. interest rate cuts. However, Japan may see a slight increase in its policy rate, while mainland China is expected to maintain loose monetary policy. The office real estate market will see a significant increase in supply, leading to higher vacancy rates in most markets. Cost control, value for money spaces, and workplace optimization will be prioritized by firms. The retail sector is expected to have weaker spending growth due to the softer economic outlook, but retailers will still have opportunities for upgrades and expansion. Logistics occupiers' expansion plans are expected to moderate, resulting in more lease renewals and an increase in availability of space. In the hotel sector, occupancy growth in well-managed assets will drive revenue growth, particularly in Japan and Korea. Commercial real estate investment is expected to be muted in H1 2024 due to limited yield expansion and high interest rates, but an uptick is anticipated in H2 2024 due to re-pricing and interest rate cuts. Demand will be driven by high-net worth buyers, cash-rich investors, and corporations seeking high-quality assets.