now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk
Asset Management
Asia-Pacific 2022 real estate investing down 27%
Rate hikes, global uncertainty weigh, but region expect to be least impacted in 2023
The Asset 31 Jan 2023

Commercial real estate investment in the Asia-Pacific region declined by 27% year-on-year as a tightening interest rate cycle and global macroeconomic uncertainties influenced decision-making, according to a recent report.

Direct investment in Asia-Pacific commercial real estate totalled US$129 billion for the full-year 2022, according to data by global real estate consulting firm JLL, in line with its projections.

The fourth quarter saw a 41% year-on-year decline in activity across Asia-Pacific. However, the US$30.7 billion in capital deployed between October and December represented a quarter-on-quarter increase of 12%, reinforcing JLL’s conviction that the slowdown is likely to moderate in 2023.

“Investors reset short-term deployment strategies in 2022, but remain committed to the longer-term prospects of the Asia-Pacific real estate market,” says Stuart Crow, JLL’s CEO for capital markets in Asia-Pacific. “Price discovery will continue to be a major theme for investors in 2023 and is poised to influence deployment strategies for the first half of the year as bid-ask spreads tighten.

“Encouragingly, factors including the reopening of China, an expected recovery in Japan, and the belief that Asia-Pacific will be the least impacted region by any global economic slowdown, bodes well for a strong resumption of activity in the second half of 2023.”

Singapore, South Korea, hotels stand out

Singapore emerged as the region’s best-performing market in 2022 with total commercial real estate investments climbing by 53% year-on-year, JLL notes. Supported by robust first-half office market activity and a sizable one-off retail portfolio transaction in December, Singapore drew US$14.2 billion in direct investments. Hong Kong’s attractiveness improved following the relaxation of Covid-19 curbs. However, with full-year investments of US$7.7 billion, the market was down 24% year-on-year.

South Korea was the most active investment market in 2022 with US$26.2 billion in transactions despite posting an 11% year-on-year decline, JLL data reveal. China, driven by a pickup in fourth-quarter activity, attracted US$24.8 billion, down 37% year-on-year.

A solid rebound in the fourth quarter pushed volumes in Japan to US$24.7 billion for the year, down 40% on 2021. Australia, grappling with a disconnect between buyer and seller expectations, saw a decline of 38% year-on-year for a total of US$20.9 billion invested.

The hotel sector was Asia-Pacific’s best-performing asset class in 2022 compared with the prior year. Backed by the resumption of business travel and tourism, it attracted US$10.1 billion in capital, up 7% year-on-year.

Office, which remained the region’s most traded asset class, finished the year with US$60.5 billion in investments, down 18.7% year-on-year as investors became more selective as the bifurcation between core and secondary assets continued to play out. Logistics and industrial transactions declined 46% year-on-year with US$25.9 billion in capital deployed. Retail real estate volumes regionally were US$23 billion for 2022, a year-on-year decline of 39%.

“Green shoots in the fourth quarter ensured that the challenging investment market ended 2022 on a more optimistic note, snapping a year of volume declines,” notes Pamela Ambler, JLL’s head of investor intelligence for Asia-Pacific. “We expect the bright spots of strong fundamentals in select office markets, value-add retail, and cyclical and opportunistic buying in the region’s more mature markets to help drive deal flows in 2023.”

Conversation
Woon Shiu Lee
Woon Shiu Lee
managing director, group head of wealth planning family office & insurance solutions
DBS Private Bank
- JOINED THE EVENT -
5th ESG Summit
Swinging into action
View Highlights
Conversation
Marat Zapparov
Marat Zapparov
chief executive officer
Pentagreen Capital
- JOINED THE EVENT -
8th Asia Sustainable Infrastructure Finance Leaders Dialogue
Leading the way in sustainable infrastructure
View Highlights