Investors are more concerned about the uncertainty the war creates and less focused on whether it will “escalate or de-escalate”. The uncertainty, which could keep interest rates high and fuel inflationary pressures, would directly affect “pricing, leverage and deployment speed”, according to Cushman and Wakefield.
The survey's full findings will only be released in July. It aims to provide an evidence-based view of investor intentions, priorities and constraints across the region’s living sector, says Cushman & Wakefield. Respondents include global investment managers, sovereign wealth and pension funds, listed Asian real estate groups and specialist living-sector operators.
The survey examines areas such as capital allocation, preferred living sub-sectors and geographies, refinancing exposure, operational challenges, regulatory barriers and environmental, social and governance requirements, as well as the amount of capital investors are prepared to deploy in the near to medium term.
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Investors turn more cautious
The findings also show that investors are becoming more cautious about deploying capital into the Apac living sector following the Middle East conflict.
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Around 62% of respondents say they are now slightly more cautious about deploying capital over the next 12 months, while 4% say they are much more cautious. Another 31% report no change in sentiment, while 4% say they are slightly more willing to invest.
On deployment timing, 54% say they are slightly delaying investments, while 4% are pausing new deployments entirely and another 4% are materially delaying investments. Meanwhile, 38% say their deployment timelines remain unchanged.
Still, Cushman & Wakefield notes that the conflict has not triggered a “broad withdrawal” from the living sector. “The main impact is on pace and timing, not conviction. For owners and operators, this means capital is still available, but execution may take longer,” says Cushman & Wakefield.
Instead, investors are placing greater emphasis on income resilience, defensive fundamentals and downside protection.
Preference for stabilised assets
With development and repositioning risks rising, investors are increasingly favouring stabilised, income-producing assets.
More than half of respondents (54%) say they are most comfortable pursuing stabilised assets, while 35% indicate a stronger preference for defensive assets.
Another 35% say they now have a lower appetite for development projects, while 23% prefer larger, more liquid markets and 12% report reduced appetite for repositioning opportunities.
Meanwhile, nearly half (42%) of the respondents say the crisis has not changed their investment approach.
If the conflict persists for another three to six months, investors expect underwriting assumptions to tighten further. Higher debt costs (35%) and increased return requirements (19%) were identified as the most likely adjustments.
“Investors are effectively saying that if uncertainty lasts longer, deals will need to work against a more demanding financing and return backdrop,” reads the report.
