Allianz, Benoy, JLL, Asia Green Tackle the New Economy’s Impact on Office Markets: MTD TV Office Strategies Forum 2021

The rise of Asia Pacific’s tech economy and the resulting tussle among firms to secure top talent have big implications for the region’s office markets, according to experts from Allianz Real Estate, Benoy, Asia Green Real Estate and JLL, who appeared at the Mingtiandi Office Strategies Forum 2021 today.

In a panel sponsored by Yardi, Danny Phuan of Allianz, Terence Seah of Benoy, Augustine Chin of Asia Green and Tim Graham of JLL focused on how APAC’s office sector is being reshaped by demand from internet, fintech and other innovative industries, and how investors are reacting to this trend.

Terence Seah, Benoy’s head of Hong Kong, Singapore and Shenzhen, observed that new-economy ecosystems tend to develop through tech-related firms’ adjacency to one another, most famously in the case of Silicon Valley. He pointed to Singapore’s Tanjong Pagar area as a prototype for the sort of live-work-play district that appeals to urban tech professionals, who skew younger.

“What I noticed is that the biggest difference between Tanjong Pagar and traditional office areas is that it has a live-in population, there is social housing nearby and there’s a really vibrant mix,” Seah said. “Many governments are introducing vibrancy in the traditional downtown because it now seems that financial sector employees are also looking for that.”

A Sense of Place

In his remarks, Seah highlighted the importance of the physical environment, noting that Tanjong Pagar boasts ample public space for activities ranging from outdoor yoga to musical performances.

Addressing what distinguishes the tech sector from other types of office occupiers, Seah said: “From a design perspective, other than the design of physical space, (it) is the placemaking strategies injecting activities and vibrancy at the street level. It’s very interesting how when certain new industries come in, it kind of starts changing the character of the whole city in their vicinity.”

Asia Green managing director Augustine Chin has spotted similar transformations in a China tech hotspot, but not in his home base of Shanghai.

“Personally I like Chengdu, it’s my second favourite city in China next to Shanghai,” Chin said. “Chengdu is not small, it’s a city of 16 million people and it’s growing pretty rapidly, the population growth is about 1 percent per year, which is pretty impressive.”

The capital of southwestern China’s Sichuan province essentially has two CBDs: a traditional downtown area where many professional service firms and financial houses are, and a southern CBD where there are numerous tech firms and where Asia Green has invested in the World Financial Center.

“When you stand in our building and look out, you’ll see Tencent, you’ll see Alibaba, you’ll see all these high-tech firms around,” Chin said. “And that’s one of the things we like and that’s one of the reasons why we invested in this, is because we know that with all these companies, they bring with them the partners building an ecosystem around the whole entire area, and that’s exactly what has happened over the last 10 years since Alibaba has been there.”

Regional Tech Magnets

JLL executive director Tim Graham also focused in on Alibaba, noting how its mid-2020 acquisition of a 50 percent stake in Singapore’s AXA Tower showed that mainland tech firms are getting serious about expansion into Southeast Asia and other parts of the region. Already an anchor tenant of the tower, Alibaba is redeveloping the property with its locally based partners.

“Alibaba, it’s a really great example of the commitment that a major tech company is showing to the region and obviously moving out of China into foreign markets, and the Singapore project was a huge sign of commitment for Singapore itself,” said Graham, who heads JLL’s APAC capital strategies division.

“If you look at the growth of the tech companies in Singapore themselves, between 5 and 10 years ago about half of the take-up was really focused on the financial services tenants,” he said. “Now, financial services is really only 25 percent and that’s where the tech companies have stepped in. So we’ve seen a lot of growth in the interest for tech tenants coming into Singapore, there’s a lot of focus on attracting talent and catering to the new growth and the headcount that they’ve got, and it’s a highly competitive industry to recruit into, so they’re very focused on getting the best-in-class space.”

Beyond China and Singapore, Allianz’s Danny Phuan sees tech-driven opportunities for office investment across the broader region, including Australia, Japan and particularly India.

“In India, we have two assets that are ready for lease,” said Phuan, who leads the Allianz acquisitions team across the region. “I was checking with my colleagues last night; one of the buildings we have is about 80 percent tech companies, and the other one is like in the high 70s.”

Well-located business parks are Allianz’s primary target in India. With more than $2.5 billion in real estate transactions in Asia Pacific, Phuan’s team is also investing in line with the tech theme in mainland China, where it purchased the Innov Star building in Shanghai’s Zhangjang tech park in January of this year.

In 2019, the property investment division of Allianz Insurance had teamed up with Singapore’s Alpha Investment Partners to acquire an 85 percent stake in a Beijing tech park asset for $1.1 billion.

Property Innovation Ahead

With the Office Strategies Forum done and dusted, next up is Mingtiandi’s Property Innovation Forum, showcasing how developers and investors are using proptech systems.

The opening session of the forum on 23 November will feature a presentation of the findings of Mingtiandi’s latest survey on tech adoption with Michael Cole and Yardi regional director Bernie Devine, as well as interviews with other industry experts.

The second session on 30 November will welcome a panel of developers, investors and tech experts to discuss how technology is being used on projects around the region, while the third segment on 2 December is an in-depth interview with the head of MSCI’s Asia Pacific operation, Varun Malik, on how companies are harnessing data and property information to better manage their portfolios and inform their strategies.

Beatrice Laforga provided reporting for this story.