AISA: According to the latest research by JLL, Asia Pacific’s commercial real estate investment activity amounted to US$27 billion in 1Q2023, a significant drop of 30% compared to the same period in the previous year.
Most of the region saw lower volumes of investment activity. Singapore, for instance, recorded a 66.8% year-on-year decline to US$1.9 billion, South Korea experienced a 69.5% year-on-year drop to US$2.5 billion, while China’s investment volume fell 16.4% year-on-year to US$6.9 billion. Australia also experienced a 25.6% year-on-year fall to just under US$6 billion.
However, Japan was the only nation in the region to see an increase in investment volume, rising 4.7% year-on-year to US$8.9 billion. JLL’s report attributed this surge to headquarters building disposals from Japanese corporates and a flurry of acquisitions by J-REITs in the office sector.
JLL’s report also highlighted that investment volumes fell across all sectors during the first quarter of 2023. The office market investments fell 26.6% year-on-year to $12.7 billion, which JLL notes as one of the sector’s softest quarters on record. Similarly, investment volumes in the logistics and industrial sector fell by 24% year-on-year, largely due to a new cycle of price discovery and funding challenges.
In the retail sector, investment volumes totaled US$5.3 billion in 1Q2023, which is lower than the five-year quarterly average of US$7.5 billion. While Singapore saw some retail deals, such as the sale of a 50% stake in Nex shopping mall by Mercatus Co-operative to Frasers Property and Frasers Centrepoint Trust for $652.5 million, large-scale shopping mall trades were absent from the rest of the region.
Overall, JLL notes that while the Covid-19 pandemic has particularly impacted the region’s property markets, the extent of the decline in investment volumes was more significant than expected, due to the prolonged economic uncertainty, as well as the restrictions on international travel and mobility. However, the report also states that investor sentiment is still positive, in particular, for safe-haven assets, and it expects to see a gradual pick-up in transaction volume during the course of this year.