Asia Pacific real estate investments return as volumes reach $83.5 billion

Increased investment into the office, retail, and logistics and industrial sectors indicates the region’s ongoing recovery 

Up to 69 percent of the total investment volume came from China, Australia, and South Korea. sayanuranan/Shutterstock

According to leading professional services firm JLL, Asia Pacific real estate investments rose by 39 percent year-on-year, as figures reached USD83.5 billion in the first half of 2021.  

Sectors including logistics and industrial, office, and retail received increased investment, showing continued recovery of the region’s capital markets.  

Up to 69 percent of the total investment volume came from China, Australia, and South Korea, while Japan’s activities were weaker due to COVID-19 disruptions. JLL analysis of capital flows in Q2 2021 shows that logistics and industrial, office, and retail investments made up 30 percent, 31 percent, and 30 percent respectively.  

Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL, said, “Asia Pacific real estate investment is clearly back as investors reaffirmed their positive outlook, ensuring a sizable upswing in year-on-year volumes in the first half. We expect further activity in the second half of 2021 as investors to look to portfolio deals, corporate sale and leasebacks, and seek more diversification into sectors like logistics and industrial, life sciences and multifamily.”  

Regional e-commerce expansion, relative yield spreads, and investors’ desire to diversify have driven favourable demand dynamics, causing logistics and industrial investments to increase by 215 percent year-on-year in the second quarter to USD15 billion.

Office demand recovered in most cities, hitting USD15.5 billion in investment. For the first time since Q4 2019, Australian CBD office markets recorded positive net absorption, while office rents turned the corner in Singapore and Shanghai.  

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Corporate sale and leaseback transactions went beyond 10 percent of volumes in H1 2021, a jump from the average of seven percent in 2015 to 2020. As stated by JLL, Japan ignited this trend as more corporates are shifting towards an asset-light strategy. Australian corporations also turned to sale and leaseback transactions to unlock value and focus on core business.  

Regina Lim, head of Capital Markets Research, Asia Pacific, JLL, said, “We expect logistics and industrial investments to double to USD50 to 60 billion by 2025, while at the same time, investors are seeing signs that office markets are stabilising. With ongoing appetite for defensive assets and expected growth avenues like sale and leaseback, we maintain our expectations that investment volumes will rise 15 to 20 percent in 2021.” 

The Property Report editors wrote this article. For more information, email: [email protected].