Global asset manager Standard Life Investments says Australia is forecast to be the top-performing commercial real estate market in Asia Pacific.
Sydney and Melbourne office spaces are tipped to be the winners "given a resilient Australian economy, while dominant prime regional shopping centres should also perform well", with Perth expected to underperform, according to head of real estate research Anne Breen.
In its Q1 2017 Real Estate Update report, the demand for commercial real estate in Asia Pacific "remains positive" in 2017, with Australia as the preferred market.
Elsewhere in the region, "the Tokyo office market is peaking and we expect healthy, but lower returns in 2017 as the new supply-line grows," Breen said.
Singapore and Hong Kong office and retail, and some mainland China office markets are expected to underperform given high and growing supply, and weakening demand in 2017.
"Seoul commercial real estate may surprise this year with stronger growth. The bulk of the city's oversupply has been absorbed and tenant demand may improve because of the recovering economy, supported by stronger ties with China. Weaker regional currencies because of the strong US dollar and low interest rates may attract renewed interest and investment volumes may improve," the report said.
SLI is forecasting the UK real estate market to be subdued, while the European market cycle is entering a mature phase that's seen its strongest market returns lapse.
In the US, shifting policies will affect commercial real estate demand; office and industrial space demand is likely to increase as companies choose to grow their workforce domestically.