Cap rates stabilize

Mumbai, 29th July 2023: Colliers released its Asia Pacific Cap Rates Report | Q2 2023, which that reflected most markets across the Asia Pacific region have showcased resilience over the past quarter. The office market continues to make waves with the back-to-office shift, but investors are still displaying a cautious approach given the global economic volatility. Office rentals have remained flat QoQ and vacancy levels have risen slightly.

The industrial segment, on the other hand, is witnessing augmented demand, driven by the flourishing e-commerce, manufacturing, retail, FMCG, and 3PL sectors.

“The rentals across major micro-markets have remained unchanged. Absorption and vacancy levels have remained stagnant Q-o-Q. However, with larger institutional players warehousing is seeing traction and offering better returns to investors as compared to other asset classes.”, says Ajay Sharma, Managing Director, Valuation Services.

Bengaluru8.50%8.75%Marginally up9.75%10.75%Marginally up7.00%7.25%Flat

While the cap rate still remains flat, the retail and hospitality sectors have been making a healthy comeback post-pandemic, owing to increased consumption, higher disposable income, and pent-up demand for business and leisure travel. “The Grade A space demand has remained consistent as previous quarters though the occupiers are taking cautious calls on the locations where the new stores are being opened leading to the challenging environment in certain micro-markets.”, adds Sharma.

Mumbai has emerged as the market with the most movement, reinforcing investor sentiment.