APAC corporate real estate monetisation to grow by up to 10% this year

Real estate private equity funds alone have raised around USD104b between 2017 and 2021.

According to CBRE, Asia Pacific commercial real estate investment has diversified substantially over the last 15 years, with core open-ended funds growing from US$8.9 billion and nine funds in 2006 to over US$112 billion and 33 funds as of end-2021. 

The establishment of REITs in emerging markets such as Mainland China and India has also helped the market mature and bolstered investment appetite for commercial real estate. 

Here’s more from CBRE:

Additionally, the past five years have seen real estate private equity fund raising reach record highs, both in terms of the number of funds and volume of capital. Around US$104 billion was raised by real estate private equity funds in Asia Pacific between 2017 and 2021, an increase of 60% from the previous five-year period’s US$63 billion. 

CBRE expects demand for corporate sale leasebacks to continue to grow in 2022 as the large volume of capital targeting Asia Pacific real estate prompts many corporate owner occupiers to evaluate the benefits of owning versus leasing. Asia Pacific investors will continue to lure corporate owner occupiers into parting with their assets by offering attractive prices. 

Investors are also likely to adopt a more accommodative stance towards leaseback terms better suited to corporates’ immediate needs, such as by offering shorter leaseback terms to increase the gain on sales over net book value, especially as corporates continue to adapt to recent IFRS16 and ASC842 lease accounting changes. 

2022 will be another strong year for corporate asset monetisation, with CBRE forecasting strong deal flow for both sale leasebacks and disposals, particularly in the industrial & logistics and data centre space. More corporate owner occupiers will look to capitalise on the upbeat investment climate as pricing rises across different asset types.

While corporate sale leaseback activity in Asia Pacific remains at a nascent stage, trends in this region are likely to mimic those observed in the U.S. and EMEA, both of which have seen steady annual growth in sale leasebacks since 2012. CBRE expects corporate asset monetisation in Asia Pacific to grow by 5% to 10% in 2022.