Asia Pacific real estate investments down 30% y-o-y in 1Q2023: JLL

Investment activity in the commercial real estate market in the Asia Pacific (APAC) region dropped 30% year-on-year (y-o-y) to US$27 billion in 1Q2023, according to global real estate consulting firm JLL. This fall follows recent interest rate headwinds and asset price adjustments.

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“The market continues to be challenging, with many investors expressing concern about the tightening of lending standards and the uncertainty it could lead to for the commercial real estate market,” explains Stuart Crow, CEO, Capital Markets, Asia Pacific at JLL.

Most of the countries in the APAC region experienced a decrease in investment volume. South Korea saw a 69.5% y-o-y fall to US$2.5 billion, while Singapore dropped 66.8% y-o-y to US$1.9 billion. China’s investment volume fell 16.4% y-o-y to US$6.9 billion, and Australia recorded a 25.6% year-on-year decrease to just under US$6 billion.

In contrast, Japan registered a 4.7% y-o-y increase to US$8.9 billion. JLL’s report states: “The office sector experienced a considerable growth due to headquarter building disposals from Japanese corporates and acquisitions by J-REITs.”

The first quarter of 2023 recorded the softest quarter for office market investments, declining 26.6% y-o-y to US$12.7 billion. Meanwhile, investments in the logistics and industrial sector fell by 24% year-on-year.

Retail investments totalled US$5.3 billion in 1Q2023, lower than the five-year quarterly average of US$7.5 billion. Singapore saw notable 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 US$652.5 million.

Hotel investments in Apac also dropped 30% y-o-y to US$2.4 billion due to the macroeconomic challenges and the current US and European banking crisis.

JLL’s Crow remains positive about the situation in the APAC region: “Asia Pacific remains relatively insulated and liquidity risks are more contained in the region. We’re confident that a resumption of activity will happen, it’s