This is the year for investors to consider ‘strategic entry’ into India’s property market, says JLL
Developments in proptech and talent retention will also increasingly impact the industry
The Indian property market, developments in proptech and the retention of talent will be among trends that shape the real estate industry worldwide in 2018, according to global commercial real estate services company JLL.
The company expects property transactions in Asia-Pacific to increase by 5 per cent to US$140 billion this year, driven by a momentum in core markets and an increased interest in developing markets.
A swathe of blockbuster property deals hit the headlines in 2017. Hong Kong recorded the world’s highest transaction for a single office block with the sale of The Center for US$5.15 billion, hotel conglomerate Accor acquired Australian Mantra Group’s portfolio of serviced apartments for US$1.2 billion, and CapitaLand Commercial Trust bought Singapore’s Asia Square Tower 2 for US$1.5 billion.
India will continue to be the top developing market for investors in 2018, said Dr Megan Walters, the head of research at JLL Asia-Pacific.
“India’s tier 1 office and retail sectors are projected to show the highest total returns in 2018. We’ve seen the end of the short-term disruption in India resulting from reforms such as demonetisation and the implementation of the Goods and Services Tax – 2018 may be the year for investors to consider a strategic entry into India, given its positive long-term fundamentals and economic growth.”
In 2017, institutional players targeted Indian real estate in several high-profile investments, with Singapore’s GIC purchasing a 33 per cent stake in a unit of DLF Cyber City for US$1.4 billion.
Investors will seek opportunities in the alternative real estate sector, such as aged care or senior housing, student housing, education, data centres and self storage facilities, to diversify their portfolios, and for long-term growth, the company said.
Technology will increasingly affect the way we use real estate. Proptech, the convergence of property and technology, is the latest disrupter in real estate and is likely to pick up steam in 2018.
Jeremy Sheldon, the managing director of markets and integrated portfolio services at JLL Asia-Pacific, said: “In the long term, digitisation of services, internet of things adoption and automation will have a significant impact on corporate real estate strategy, team structures and processes. The introduction of IoT – smart systems and devices operating over a network – will drive greater transparency in real estate portfolio utilisation and performance. Smart buildings will help both building owners and occupiers improve performance and save costs.”
While managing costs remains a priority for most businesses, so is access to talent. With organisations using the workplace to boost employee engagement and attract and retain talent, there will be a continued increase in companies using co-working spaces in 2018.
“The shift to creating a holistic user experience is beginning to transform office spaces. The workspace of the future is one that can meet employee needs, while driving effectiveness and engagement levels,” said Sheldon.