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Savills plc

06/16/2021 | Press release | Distributed by Public on 06/16/2021 03:04

Savills impacts forecasts outlook for 2022 real estate

The international real estate advisor predicts that, globally, tech occupiers are set to dominate leasing activity, offices will be the most popular investment sector, prime real estate yields are set to remain largely static, and Asian cities are seemingly lagging behind others around the world when it comes to prioritising sustainable investment.

Key findings include:

- Yields remaining static: overall, most Savills research heads expect prime yields to remain static over the 12 months to Q2 2022, but the exception are the industrial and residential sectors, where more expect yields to move in than to remain static or rise, reflecting increased investor interest in these sectors. Offices are set to be largely resilient, with 97% of Savills researchers anticipating yields to remain static or fall.

- Office leasing should return to pre-pandemic levels by 2022 - but there are variations: emerging markets such as China, Indonesia and Vietnam are the most bullish on leasing activity. Tech occupiers are expected to lead demand across the board, with 79% of Savills researchers anticipating higher leasing activity in their markets than in 2019.

- Offices are expected to be 2022's dominant asset class: in Shenzhen, Beijing, Guangzhou and Seoul, 60% of all investment is expected to flow into this sector. Logistics and residential are the next top picks as investors pivot to 'beds and sheds' strategies, with investors in North America in particular expected to favour residential, the world's biggest market for investable product in this space. In 2022, international capital is expected to surge into the real estate investment markets: Savills research heads expect, on average, 47% of all investment to come from international investors (of which just under half from neighbouring counties) and 53% from domestic sources.

- 75% of Savills research heads indicated that sustainability is an important part of investors' strategies. However, researchers in several major cities in Asia-Pacific said it is not yet deemed important by buyers, including Hong Kong, Tokyo, Jakarta, and Seoul. Savills says that this is likely to change soon, given the global focus on the ESG agenda. In terms of motivation behind embracing a sustainability-led investment strategy, a majority of Savills researchers (54%) believe that company reputation is the strongest driving factor, while 46% indicated the opportunity to increase returns was also a significant motivator.