Global real estate investor confidence growing in Asia Pacific region – JLL

PETALING JAYA (April 23): Investors’ confidence in the Asia Pacific region real estate market is gaining traction with anticipation of increased market stability, said a Jones Lang LaSalle (JLL) Capital Tracker report.

The report, which was released on April 22, indicated that the region recorded over US$34 billion (RM140 billion) in direct investments within the first quarter of 2021 – a decline of less than 1% year-on-year (y-o-y).

Meanwhile, investment volumes decreased 23% compared to the fourth quarter of 2020, but managed to outperform other regions such as North America, Europe, the Middle East and Africa – all of which registered larger y-o-y declines.

According to JLL Property Services (Malaysia) Sdn Bhd country head YY Lau, the research indicated that the majority of investment activities occurred in markets with strong domestic liquidity. 

The first quarter of 2021 showed that more than 70% of the total investment volume went to Japan with US$11.5 billion (RM47.3 billion), China with US$8.3 billion (RM34.13 billion) and South Korea with US$4.3 billion (RM17.68 billion).

Lau also added that global institutional investment activity picked up in Australia (+68% y-o-y) and Singapore (+280% y-o-y) and the sectors with the most growth were Logistics investments, followed by Hotel and Retail investments – this includes LOGOS entering into a joint-venture with Global Vision Logistics to develop a US$371 million (RM1.526 billion) complex in Malaysia.

Australia's investment volume increased by 68% y-o-y to US$3.2 billion (RM13.16 billion) – buoyed by the acquisition of Martin Place (South Tower) by Investa and Manulife from Macquarie Group.

Singapore's volume surged by about 280% to US$2.5 billion (RM10.3 billion), thanks to Allianz Real Estate buying a 50% stake into OUE Bayfront.

JLL capital markets research head (Asia Pacific) Regina Lim said that allocations to the Asia Pacific region will only grow in 2021 with transactions fuelled by recent activities in markets with strong domestic liquidity and the region’s attractiveness to global investors.

"Secular tailwinds will continue to accelerate the weight of capital into sectors like logistics, while new economy themes will drive capital allocations this year and beyond. We maintain that investment volumes will rise by 15% to 20% in 2021, driven by structural growth in logistics, data centres and multifamily sectors, while office investments are likely to rebound in tandem with economic growth,” added Lim

In the first quarter of 2021, logistics assets managed to attract investor interest with volumes rising by 26% y-o-y, comprising 23% of all transactions.

Office remained the region’s largest commercial real estate sector which drew in 47% of all investments in the first quarter to post a 2.5% y-o-y growth.

Retail and hotel activity constituted 22% of all transaction activities in the first quarter to mark a 5% higher y-o-y growth while multifamily and other sectors consisted of the remaining 8% of transactions.

According to the company, uncertainty surrounding regional office demand will continue to weigh on transaction volumes, but the perception of risk around the sector will create opportunities for investors. 

In the first quarter, office leasing was muted in most metros, but demand picked up in major centres including Seoul, Shanghai and Singapore.

The firm predicts that demand for flex space and sustainable, energy-efficient buildings will attract investors to the longer-term future of the sector.

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