In the last decade, prime office yields have compressed in most major cities across Asia Pacific as an abundance of capital has been met with lower financing costs.
Yet, the yield compression has not fully reflected the recent decline in financing costs, and yield spreads have widened across the region since 2013.
Skeptical as to the longevity of low interest rates, investors have already factored a 50-150bps increase in interest rates into their asset pricing. Lending margins have also narrowed by 50-100bps over the last five years due to new sources of funding and competition.
Read the report for more on how the market is likely to react to a changing economic environment.