2024 outlook: India at the helm of APAC real estate surge, residential in the lead

In a bullish outlook for the Asia-Pacific real estate arena, India, notably Mumbai, is to take centre stage with an optimistic forecast for commercial, residential, and capital markets. Anticipating a 43.7 per cent surge in logistics supply across APAC in 2024 according to Knight Frank's New Horizon Outlook 2024 report.

Despite this surge, the report suggests that average rent will continue to climb, albeit at a more measured pace, driven by unwavering demand. Homebuyers are increasingly eyeing India, attracted by favourable homeownership dynamics, stable mortgage rates, and escalating property prices.

Mumbai's prime residential market is expected to witness a 5.5 per cent YoY growth in prices in 2024, propelled by surging demand and economic growth. The report underscores the resilience of the Indian real estate market, with the residential, office, and warehousing sectors expected to remain buoyant, supported by the government's emphasis on decentralising supply chains and promoting manufacturing.

Shishir Baijal, Chairperson and MD, Knight Frank India, pointed out the growth potential in the residential sector, fuelled by consistent demand, stable interest rates, and robust GDP expansion. He also highlighted the steady rebound of the office sector from pandemic-induced challenges, driven by strong demand from India-facing businesses and Global Capability Centres (GCC).

Megatrends driving real estate momentum

1. Continued urbanisation: Despite demographic challenges, the region's urban population is set to grow, fuelled by ongoing rural-to-urban migration.
2. Magnet for foreign investment: Asia-Pacific attracts foreign direct investment, accounting for 55 per cent of global inward FDI in 2022.
3. Middle-class growth: By 2024, more than half of the Asia-Pacific population is expected to be middle-class
4. .Largest working-age population: The region's young and fast-growing labour pools, coupled with conducive policies, are projected to drive economic expansion.

Sector-specific projections

Residential:

• The region is poised to return to mid-single-digit growth in 2024.
• Positive sentiment in Australian and New Zealand markets, with Auckland and Sydney anticipating a 5 per cent growth in prices.
• Manila leads the Southeast Asian market, projecting a 5.9 per cent growth in 2024.
  
  Capital markets:
• Private capital continues to be a driving force in Asia-Pacific commercial real estate.
• Opportunities persist amidst crises, particularly in thematic sectors like living spaces, life sciences, and data centres.
  
  Office:
• A focus on newer and ESG-certified buildings.
• The Asia-Pacific prime office sector is expected to favour tenants in 2024, with a vacancy rate trending upwards.
  
  Logistics:
• Prime logistics spaces remain well-supported by resilient demand.
• E-commerce demand growth has slowed post-pandemic, but geopolitical tensions and environmental concerns are reshaping the logistics landscape.
  
  As the APAC region positions itself as the fastest-growing in 2024, India, alongside China, emerges as a frontrunner, showcasing the resilience and potential of the region's real estate market.