Over US$40 bil in untapped value locked in underutilised APAC properties: JLL

/ EdgeProp Singapore
May 4, 2021 5:14 PM SGT
SINGAPORE (EDGEPROP) - A report by JLL has highlighted that real estate investors and landlords of properties in the Asia Pacific are missing out on income opportunities and cost savings as their assets age. According to the report, half of investment properties in prime locations in the region are over 20 years old, and the international consultancy estimates that there is over US$40 billion ($53.4 billion) worth of unrealised value in ageing and underperforming properties in the region.
“With Covid-19 changing market dynamics and tenant expectations, many existing buildings no longer yield the same value as before the pandemic,” says Andrew Macpherson, head of asset development, JLL Asia Pacific.
To stay relevant, he adds, landlords must attract tenants and meet their evolving demands. “Landlords and investors alike are increasingly aware of the need to enhance their built assets, ranging from design improvements to extensive upgrades, and even repositioning or repurposing the entire property,” says Macpherson.
JLL states that rental rates for aged and outdated buildings are 10% to 40% lower than up-to-date, well-managed properties in similar locations. This difference in rates may also increase as newer post-pandemic designed buildings enter the market.
The consultancy says there are five real estate sectors that present the most potential for asset enhancement: offices, retail, industrial, hotels, and residential.
Office space should be updated to accommodate new modes of working such as having flexible spaces, and retail malls must “move fast” when competing against e-commerce, says JLL.
Automation and robotics are likely to change the demands of warehousing and logistics facilities, and older hospitality assets could be refurbished as co-living or serviced apartments. Ageing residential properties could be redeveloped as senior living, student housing, and mixed-use developments, adds JLL.