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Elevated interest rates have been taking their toll globally, but commercial real estate investment remained strong in the Asia Pacific in early 2024.
The region saw 13 per cent growth in Q1 2024, marking the second quarterly year-on-year increase after seven consecutive quarters of investment declines, according to JLL.
Investment volumes across the Asia Pacific hit US$30.5 billion, with North Asia taking the lead.
“The first quarter reflects a continued appetite from investors looking to capitalise on Asia Pacific’s strong economic fundamentals and attractive pricing opportunities across markets and asset classes,” said JLL’s CEO of Asia Pacific capital markets, Stuart Crow.
“We’re seeing renewed interest from domestic and cross-border sources targeting a diverse range of risk profiles,” he said.
Across the Asia Pacific, the office sector was the most active, despite a 1 per cent year-on-year drop in office volumes. Logistics and industrial reigned supreme for volume growth, despite pricing uncertainties keeping cross-border investment activity at a modest level.
Japan was the most active Asia-Pacific market, with the country seeing an investment of US$11.5 billion over the quarter, a 29 per cent year-on-year increase. JLL cited Japan’s loose financial conditions, positive yield spreads, and weak currency as strong reasons behind its consistent appeal to overseas investors.
Domestic buyers in Japan focused on core assets, while foreign investors made large acquisition in the office, industry and industrial sectors.
Meanwhile, South Korea scored a major 73 per cent year-on-year increase in commercial assets, with a total of US$4.3 billion in Q1 2024.
Office assets were particularly popular in South Korea, thanks to the sector’s stable fundamentals, low vacancy rates and “bullish” leasing demand.
Singapore saw 14 per cent year-on-year growth, with US$2.2. billion invested in the first three months of 2024.
The region’s other major economies – Australia (US$3 billion), China (US$5.6 billion) and Hong Kong (US$0.7 billion) – all experienced a decline in investment volume compared to 2023.
Australia and China both saw a year-on-year drop of 19 per cent, while Hong Kong saw a decline of 54 per cent.
JLL’s head of investor intelligence for Asia Pacific, Pamela Ambler, stated: “Uncertainty surrounding interest rates continues to influence investment activity in Asia Pacific, but we’ve seen a partial rebound and recovery in 2024 as markets recalibrate their expectations.”
Ambler continued: “Sentiment continues to be influenced by the strong US economy despite higher base rates, potentially leading to a prolonged path to the beginning of a reduction cycle.”
“Looking ahead, we expect further investment activity as repricing sets new benchmarks for trade, and investors adapt their portfolios and strategies to the current rate environment.”
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