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JLL: Asia-Pacific real estate investment volume surges 30% y-o-y in 9M2021

KUALA LUMPUR (Oct 22): Asia Pacific real estate investment volumes continued to rebound strongly in the first nine months of 2021, up 30% compared to the same period in 2020.

According to “Capital Tracker Q32021” report released recently by global real estate advisor JLL, Asia Pacific direct real estate transactions year-to-date reported US$125 billion (RM519 billion), just 6% below 2019 levels as investors deployed capital into to more income-resilient assets, such as the office and logistics sectors.

For the third quarter alone, real estate investment in Asia Pacific was US$39.5 billion, a 10% increase year-on-year (y-o-y). However, transactions were down by 23% quarter-on-quarter as several regional economies were impacted by the resurgence of Covid-19 and subsequent restrictions on movement and activities.

“Despite ongoing unpredictability, our interactions with clients reaffirm both the attractiveness and resilience of the Asia-Pacific commercial real estate sector. Throughout 2021, investor interest in the region has remained extremely high as capital becomes more active and volumes approach pre-pandemic levels across the region, which we expect will continue into the fourth quarter,” said JLL Asia Pacific’s Capital Markets CEO Stuart Crow.

In the third quarter of 2021, office investments continued to recover, making up 55% of deals, supported by stabilising rents and occupancy levels. In tandem, logistics transactions continue to climb, with investments in the past 12 months reaching US$43 billion, compared to US$25 billion in 2019.

Meanwhile, JLL anticipated that the logistics investments would double to US$50 billion-US$60 billion between 2023 and 2025, driven by favourable demand drivers, attractive yield spreads and a desire for diversification.

“Malaysia continues to be one of the favourite locations to construct data centres around the SEA region. We foresee more such developments happening in the near future since the launching of the MyDigital initiative by the Malaysia Government enabling the rakyat to embrace digitalisation and thereby enhancing the quality of life,” JLL Property Services (M) Sdn Bhd country head Y Y Lau (pictured) noted.

On the other hand, retail and hotel investments have been soft as economic recoveries across the region were delayed due to Covid-19 outbreaks. Hotel investment volumes are set to cross US$7 billion for the full year 2021, growing to US$9 billion in 2022, JLL estimated.

“We expect portfolio reallocation to remain a major theme into 2022 with investors facing stiff competition for income-resilient assets including office and logistics, as well as in more niche sectors such as self-storage, residential and data centres.

“Overall, investor sentiment remains positive and we maintain our view that investment volumes will rise 15% to 20% in 2021 with further recovery expected in 2022,” said JLL Asia Pacific’s head of Capital Markets Regina Lim.

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