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Commercial real estate investment volumes rebound in Asia Pacific

posted onOctober 25, 2021

Commercial property investment in Asia Pacific spiked 30% in the first nine months of 2021, compared to the same period a year ago, according to global real estate consultancy Jones Lang LaSalle Incorporated (JLL).

Direct real estate transactions year-to-date reached $125 billion, just 6% below 2019 levels and the investment volume will rise 15-20% by the end of the year, JLL expects. Investors deployed capital into more income-resilient assets, such as airport assets, self-storage, residential and data centres, the analysis in JLL's Capital Tracker Q3 2021 showed.

Volume in Australia doubled year-on-year, due to large industrial and office sales, reaching over $6.3 billion in direct investments for the quarter. Investment activities in Japan stood at $11.8 billion (up 51% year-on-year) while in South Korea at $7 billion (up 1% year-on-year) supported by domestic REITs and investment managers. In contrast, volume in China ended the quarter at approximately $7.3 billion (16% down year-on-year), while Singapore fell to $1.1 billion dollars (64% down year-on-year) as sentiment was dampened by Covid-19 restrictions.

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

The consultancy expects logistics investments to double to $50-60 billion between 2023-25, driven by favourable demand tailwinds, attractive yield spreads and a desire for portfolio diversification and resilience. Retail and hotel investments remained soft as economic recoveries across the region were delayed due to Covid-19. Hotel investment volumes will likely cross $7 billion for the full year 2021, growing to $9 billion in 2022, JLL estimates.

commercial real estate investment

(Source: JLL)

“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,” says Stuart Crow, CEO, capital markets, Asia Pacific, JLL.

“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”, notes Regina Lim, head of capital markets research, Asia Pacific, JLL. 

NYSE-listed JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 92,000 as of June 30, 2021. 

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