3 in 10 APAC businesses to increase property portfolios over the next three years

And 1 in 2 plan to relocate their APAC headquarters.

Businesses headquartered in Asia-Pacific are less likely to feel the long-term impacts of COVID-19 on their real estate portfolios, with only 14% expecting the pandemic to permanently alter their real estate strategies. This is according to Knight Frank’s global (Y)OUR SPACE publication, which features survey findings of almost 400 international businesses with a combined headcount in excess of 10 million, providing unique insight into the workplace strategies and real estate needs of global companies. 

The survey results show a contrast between APAC and overall global corporate real estate attitudes, with 17% more APAC businesses likely to increase real estate portfolios and 18% fewer APAC businesses likely to decrease their global portfolios compared to their global counterparts. However, for those expecting to increase or decrease their portfolios, the proportion of those seeking to make substantial changes of more than 20% is greater than that of global levels. 

Figure 1: Is the total amount of space in your global portfolio likely to increase, decrease, or stay the same over the next 3 years?

Tim Armstrong, head of occupier services & commercial agency, Asia-Pacific, Knight Frank, said: “Positive sentiments are not uniform due to different degrees of impact the pandemic has had on different APAC economies. For markets that are impacted more adversely, there is a window of opportunity for occupiers to negotiate for more favourable lease terms. The new, high-quality assets, many of which are still under construction, will be the most sought after by occupiers due to a flight to quality.”

Another area where APAC responses diverged from the global average is the likelihood of shifting headquarters. 51% of APAC respondents said that a move is likely to happen in the next three years, which is 13% higher than the proportion of global respondents who answered similarly. While cost savings is the main driver globally for influencing this decision, the second key driver for relocation for Asia-Pacific headquarters is the ability to access different talent pools. In contrast, only 22% of global respondents found this important, prioritising a change of workstyles, business restructuring, and business transformation before considering this factor. 

“There is a real convergence of the physical and virtual nature of the way we work in future,” says Christine Li, head of research, Asia-Pacific, Knight Frank. “The office is now an intentional destination that people go for ideation, learning and collaboration. Talent acquisition and retention are hinging on companies curating a better workplace experience through providing better locations, amenities, and incentives.” 

According to Knight Frank’s (Y)OUR SPACE survey, the top three types of amenities that will be demanded by employees in Asia-Pacific include food & beverage offerings, healthcare facilities and gym facilities. Hence, we are witnessing the shift towards mixed-use development that boasts a diverse mix of residential, commercial and recreation spaces all in one area. Occupiers are likely to gravitate towards spaces that provide more amenity options, and landlords could consider implementing a long-term mixed-use strategy across their real estate portfolios. 

Click here to download the full report.