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Business confidence across the Asia-Pacific region continues to rise, driven by increasing demand and declining interest rates, according to Colliers' Q4 2024 APAC Cap Rates report.
The report highlights a surge in consumer spending during the festive season, benefiting retail markets in major cities such as Auckland, China, Hong Kong, Bangkok, and Bengaluru. In Bengaluru, strong commercial demand has outpaced supply, leading to lower vacancy rates. Rental and capital values for Grade A commercial offices along key business corridors, including Outer Ring Road (ORR), North Bengaluru, and Whitefield, have seen significant appreciation. Cap rates in these locations remained stable within the range of 8.0 per cent - 8.5 per cent, reflecting sustained demand. Additionally, transaction volumes in Bengaluru's organized retail sector improved, with capital values in high-street areas rising due to increased consumer activity during the festive season, boosting revenue shares. In Mumbai, commercial real estate has experienced a sixfold year-on-year increase in office supply, yet demand continued to exceed availability, maintaining market strength. The surge in office space supply helped keep rental growth in check, except for certain high-demand micro-markets. Meanwhile, Mumbai's industrial real estate segment recorded a slight decline in transaction volumes on a YoY basis, although supply expanded by 15 per cent in Q4 2024, keeping cap rates stable. Ajay Sharma, Managing Director, Valuation Services, Colliers India, said, ""Further, Bengaluru has witnessed improved transaction volumes in organized retail, with rising capital values in high street areas attributed to increased consumer activity during the festival season, leading to higher revenue shares. In Mumbai, industrial transaction volume has been slightly lower on a YoY basis." He added, "However, the supply has increased in the market by 15 per cent in Mumbai. Based on this, cap rates have been stable in Q4 2024. CPI inflation jumped significantly to 5.22 per cent in December 2024, with the preceding 3-month average at 5.63 per cent. This increase in inflation is attributed to the significant growth in urban inflation from Q3 2024." (ANI)
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