What does 2024 hold for real estate in 2024? We asked Savills real estate experts around the region.

In the first of a two-part series, Prospects asks the experts from Savills Research and Consultancy about what to look out for in their markets next year. We start with the mature markets of Australia, Hong Kong, Japan, Singapore, South Korea and Taiwan.

Australia

Industrial, hotels and alternatives will be among the most popular asset classes in 2024, as clarity around the interest rate outlook and pricing adjustment drives a recovery in investment activity, says Katy Dean, Head of Research and Consultancy at Savills Australia (above, bottom left).

While capital values will continue to contract, it will vary by sector. ‘Beds and sheds’ will be resilient, as will prime offices thanks to an occupier flight to quality. Low vacancy in housing stock continues to drive residential rental growth across the country and more capital will look to scale. Ongoing strong population growth and tourism recovery will also support demand for industrial, retail and hotels.

A recent trend we expect to gain further momentum in 2024 is capital recycling, as investors look to redeploy capital to opportunities with stronger risk-return prospects, further adding to investment market liquidity.

Hong Kong

Higher interest rates pushed investors out of the market in 2023 and slowing economic growth cramped occupier demand across all major property sectors, says Simon Smith, Head of Research and Consultancy, Asia Pacific, at Savills (bottom right).

Looking ahead to 2024, office rents over the year may fall a further 5% to 10% while prices could see declines of 10% to 15% across the market as a whole with a wide variation depending on quality and location. The luxury residential market will continue to look vulnerable in 2024 and we expect to see falls of 15% to 20% in values at the top end.

On the brighter side, retail is beginning to recover after almost a decade of contraction. We expect rents and values to rise by up to 5%.

Japan

The enduring appeal of multifamily residential persists, underscored by its ability to maintain a steady cash flow during the pandemic, says Tetsuya Kaneko, Head of Research and Consultancy at Savills Japan (top centre). Investors are also looking at sectors such as student housing and healthcare, although these are much smaller markets.

The logistics sector continues to show strong mid-term fundamentals, notwithstanding imminent concerns related to burgeoning supply and escalating vacancy rates. Meanwhile, office attendance experienced a noteworthy upswing in 2023 and increased supply has been absorbed.

Rapidly recovering inbound and domestic tourism is driving real estate demand. Any assets connected to high-end tourism, including hotels, retail and resorts, will benefit. Meanwhile, Tokyo’s first branded luxury residence, Aman Tokyo Residences, enjoyed a very successful launch this year, suggesting opportunities in this emerging sector.

Singapore

Office rents are expected to dip by 2% to 3%, however the flight to certified Grade A office space from non-green buildings is expected to sustain demand, says Alan Cheong, Executive Director, Research and Consultancy, at Savills Singapore (bottom centre). In positive news, strong tourist demand amid a lack of supply will support Orchard Road retail rents.

Residential prices are expected to remain flat, with the 60% Additional Buyers Stamp Duty for foreign buyers depressing demand for luxury properties. Meanwhile residential rents will fall slightly after recording an exceptional 50% growth from 2022 to mid-2023.

Logistics space remains in demand, as businesses aim to harden themselves to supply chain disruption, while demand for industrial space will be muted, but rents will be supported by low levels of new supply.

South Korea

The Bank of Korea is expected to maintain interest rates in 2024, drying up liquidity, says JoAnn Hong, Senior Director, Research and Consultancy, Savills Korea (top right). Transaction volumes are set to fall by one third in 2023 due to higher finance costs and wide bid-ask spreads.

Investors will continue to favour the office and logistics sectors, but their interest in the hotel and retail markets will be selective. Office prospects still look positive thanks to a full return to office work and logistics demand is also holding steady. However, higher debt and rising construction costs are putting some logistics developments on hold.

Demand for elderly care is increasing as Korea rapidly ages, however, institutionalised senior housing remains very limited. Recently, however, major domestic institutions have entered the senior care business, reflecting heightened investor interest in this burgeoning sector.

Taiwan

The Taiwan government’s net zero pathway and the substantial future supply in the office sector are making green building certification more important for developers and landlords, says Erin Ting, Director, PR and Research, at Savills Taiwan (top left).

Some landlords are assisting tenants to buy green energy, provide multi-function space and install EV chargers. Encouragingly the market is showing signs of moving towards a more cooperative tenant-landlord relationship in the pursuit of green goals.

We expect the industrial and logistics market to remain strong and prices to rise. The sector is supported by demand from the semiconductor industry and from retail operators, both online and offline, keen to develop modern logistics centres.

Further reading:
Asia Pacific Hospitality Spotlight November 2023

Contact Us:
Katy Dean | Simon Smith | Tetsuya Kaneko | Alan Cheong | JoAnn Hong | Erin Ting