2019 will be a year of significant change for the Asia Pacific real estate market.

Robust economic growth and an influx of capital have powered the Asia Pacific real estate market over the past decade. However, 2019 will bring an unprecedented set of challenges, including U.S-China trade conflict, financial sector instability and the rising cost of borrowing. Now is the opportune time for occupiers and investors to refine their real estate strategies and build resilience to market volatility.



This report was prepared by the CBRE Asia Pacific Research Team, which forms part of CBRE Research – a network of preeminent researchers who collaborate to provide real estate market research and econometric forecasting to real estate investors and occupiers around the globe.

© 2019 CBRE, Inc. Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.



Key changes ahead

  • Prolonged economic expansion – Despite being a decade into the upcycle, above long-term trend economic growth is set to continue for the next one to two years
  • Key risks remain – U.S.-China trade conflict and the end of quantitative easing pose major concerns
  • A new growth leader – India has replaced China as the fastest growing major economy

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Capital Markets

Take profit for early investment

  • Take Profits: Investors are advised to take profits from early investments and review their portfolios and investment strategies as higher prices, compressed yields and escalating borrowing costs translate to fewer options with justifiable returns.
  • Go Structural: Investors’ attention should be less focused on cyclical investment and pivot toward sectors that have benefited from structural trends, including modern logistics, and niche sectors such as data center and multifamily.
  • Debt financing: Investors will have considerable opportunities to provide real estate debt financing given conservative lending by banks.
  • Prudent Investing: Buyers will evaluate potential deals with caution due to the tighter yield spread against the cost of borrowing and pricing that is well above the previous peak.
  • Moderating Volume: Asia Pacific commercial property investment turnover will reach around US$120 billion in 2019.

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Office Sector

Smart Space Usage

  • Consistent Demand: Office markets across Asia Pacific will operate within a stabilized pace of expansion. Technology companies and flexible space operators, including coworking, are expected to lead demand for office space.
  • Co-working Fragmentation: Financial performance will be key for operators.  CBRE expects operators to focus on improving occupancy rather than opening new centers, which could lead to a slower demand growth and consolidation in 2019.
  • Peak Development: New developments are peaking, with nearly half of new office supply concentrated in non-core or decentralized areas – particularly in Shanghai, Bangalore and Delhi NCR.
  • Moderating Rents: Overall, the region is expected to record slower rental growth compared to the five-year average – apart from Singapore and Guangzhou. Perth is expected to see the strongest rental recovery.
  • Space Redefinition: Tenants will continue to redefine the usage of office space. Real estate assets will become more agile. The use of flexible space to complement core portfolios will be accelerated as tenants respond to the changing business environment and minimize costs and liabilities.

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Retail Sector

Omnichannel Evolution

  • Changing Dynamics: A move towards an omnichannel strategy – where retailers adopt holistic approach in formulating their online and offline sales channels to maximize brand experience. Retailers will still maintain a physical presence with enhanced service offerings, while looking to slow the pace of store network expansion or reduce the number of stores.
  • New Relationships: Landlords will benefit from revolutionizing their relationship with tenants and broaden their trade mix with more elements of entertainment. It will become increasingly important for landlords to transcend the traditional role of space provider and partner with tenants in executing their marketing and growth strategies.
  • Soft Rentals: Rental growth is expected to remain soft in 2019. Growth will mainly be driven by prime locations, with lower quality assets expected to struggle.

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Logistics Sector

Operational and Portfolio Upgrading

  • Overperform: This segment of the market will see a sustained uptick in activity, prompted by demand for urban logistics spaces to accommodate to the shift toward omnichannel retail.
  • Technology-enabled: Tenants must embrace technology to improve supply chain operational efficiency. Landlords are advised to upgrade industrial and logistics portfolios to ensure they remain competitive.
  • Growth Markets: Logistics rental growth will be led by Melbourne, Shanghai and Beijing, with overall regional growth rate at about 3%.

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