Headquartered and listed in Singapore, CapitaLand Investment Limited (CLI) is a leading global real asset manager with a strong Asia foothold. As at 30 June 2024, CLI had S$134 billion of assets under management, as well as S$100 billion of funds under management held via six listed real estate investment trusts and business trusts and a suite private real asset vehicles that invest in thematic and tactical strategies. Its diversified real estate asset classes include retail, office, lodging, industrial, logistics, business parks, wellness, self-storage and data centres.

CLI aims to scale its fund management, lodging management and commercial management businesses globally and maintain effective capital management. As the investment management arm of CapitaLand Group, CLI has access to the development capabilities of and pipeline investment opportunities from CapitaLand’s development arm.

As a responsible company, CLI places sustainability at the core of what it does and has committed to achieve Net Zero carbon emissions for scope 1 and 2 by 2050. CLI contributes to the environmental and social well-being of the communities where it operates, as it delivers long-term economic value to its stakeholders.

Investment principles & strategy 

With its research-driven, boots-on-the-ground approach, CLI has a keen understanding of local nuances and market dynamics, fostering trust and credibility within the communities in which it operates. Combined with its strong operational capabilities, it is focused on creating value within its portfolios and delivering investment performance to its investors. 

CLI focuses on seven mega trends which inform its investment strategy in the short to mid-term: 

  • Recalibrating retail 
  • Evolution of the workspace 
  • Return of international travel 
  • Structural demographic trends 
  • Sustained urban migration 
  • Supply chain & data fragmentation 
  • Rise of sustainability

Sector forecasts

INDUSTRIAL:

  • APAC continues to present an attractive landscape for the rising adoption of reshoring and nearshoring strategies with its comparatively stronger manufacturing capacity and competitive labour costs, evidenced by continued expansion by foreign multinationals. 
  • A wave of new modern facilities is set to come onstream in select APAC markets in the next few years, particularly in Greater Tokyo, Greater Seoul and Sydney, which could help to moderate significant jumps in rent levels especially as cost consciousness remains a priority for tenants. 
  • Further yield softening is on the horizon, with the decompression cycle already having commenced in several developed markets including Sydney, Melbourne and Greater Seoul, and should continue into the second half of 2024 before stabilising thereafter.

OFFICE: 

  • While hybrid work continues to be more commonplace, firms are also implementing stricter in-office attendance, with major APAC metropolitan cities leading globally. 
  • The ongoing ‘consolidation’ and ‘flight-to-quality’ themes have contributed to the growing bifurcation between Grade A and Grade B offices, with green-rated assets being increasingly favoured. 
  • Overall vacancy rates in APAC gateway cities remain well below those in the US and are comparable to or slightly lower than those in major European cities. 
  • Most developed markets are poised to register sustained rental growth in the next few years, led by Seoul, Sydney and Singapore, while an enlarged supply pipeline should continue to weigh on markets such as Shanghai and Tokyo 5-kus. 

RESIDENTIAL: 

  • The larger themes of sustained urbanisation and reduced home affordability will drive further underlying end-user demand for rental housing, especially in the larger metropolitan cities in the APAC region. 
  • Homebuyers continue to be priced out of home ownership, where price-to-income ratios have reached record levels, particularly in China (c. 25x), Seoul (c. 19x), Tokyo (c. 17x) and Osaka (c. 13x). 
  • With these evolving demographics at play, increased demand can be expected to shift towards experiential living lifestyles arising from the burgeoning of residential products (ie, multifamily, built-to-rent and co-living) and serviced residences as alternative housing options in countries like Japan, Australia and China.  

RETAIL: 

  • The cyclical recovery is progressing, and occupancy has seen improvements in the most advanced APAC markets, stabilising at healthy levels reminiscent of the pre-pandemic era. 
  • Dominant suburban and regional malls with defined catchments and good transport links will remain defensive, while prime malls in tourist hubs and CBDs will gain from international travel and return-to-office trends. 
  • Future supply is well below historical trends, as prudent landlords shunned large-scale refurbishments and extensions in recent years, a situation compounded by elevated construction and interest costs. 
  • While softer yields, influenced partly by limited compression in recent years, may offer some buffer against significant shifts in a rising credit cost environment, the sector is anticipated to experience a slight upward pressure on yields in the near term. 

HOTEL: 

  • Hotel market fundamentals are expected to rebound to pre-pandemic levels by end-2023, underpinned by the global recovery in sentiment and travel patterns. 
  • APAC is poised to benefit significantly from the return of mainland Chinese tourists, albeit on a more gradual and extended timeline. 
  • Most major markets within APAC have seen notable improvements in their average daily rates (ADRs) and have surpassed pre-pandemic levels, while the revenue per available room (RevPAR) is expected to further improve in 2024 as occupancy rates catch up and demand for accommodation strengthens. 
  • Structural drivers for the sector continue to be the recovery of business travel, the rising consumer class and the remote/hybrid work phenomenon. 

DATA CENTRES: 

  • APAC continues to solidify its position as the world’s largest regional co-location market, projected to maintain its leading position in 2026 with an estimated worth of ~$52bn. 
  • There are four major Tier 1 markets, namely Tokyo, Seoul, Singapore and Sydney, that are currently experiencing high occupancy rates in excess of 85%, while most of the Tier 2 markets are seeing moderately lower occupancy in the 70% to 80% range. 
  • Several Tier 1 and Tier 2 markets are expected to see a doubling of capacity going forward on the back of robust pipeline, leading to a temporal increase in vacancy. 
  • However, the supply-demand imbalance is likely to adjust quickly with strong tenant demand and robust market fundamentals from the emergence of new technologies, that should support further pricing growth in the coming years.

Strategic corporate development 

CapitaLand Investment will strengthen its position as a leading global real asset manager headquartered in Singapore. Its strategic focus is to expand the private funds platform and grow assets under management across three key verticals: Private Equity Real Estate, Private Equity Alternative Assets and Private Equity Lodging.  

It continues to leverage its strong presence in the Asia Pacific region, offering in-depth market insights, expertise in deal sourcing and execution across debt and equity vehicles spanning the risk-return spectrum, to deliver strong investment performance. As a leader in ESG initiatives, CLI is committed to international standards and focusing on integrating ESG best practices and sustainability principles into its investment decisions.

COMPLIANCE STATEMENT 

The information in this document does not constitute an offer to sell or a solicitation of an offer to buy any securities or otherwise invest in funds managed by CapitaLand Investment group and should not be relied upon in connection with any investment decision. Any such offer or solicitation may only be made by the applicable offering documents furnished to qualifying investors in jurisdictions where permitted by law. 

There is no representation or warranty, express or implied, made as to the adequacy, accuracy, completeness or reasonableness of the information in this document, which may be subject to change at any time and should not be construed as investment, tax, legal or other advice. Any forward-looking statements are not a guarantee of future performance. 

The information in this document may not be reproduced without the prior written consent of CapitaLand Investment group.