In Singapore, commercial real estate investment volume dropped 29% y-o-y to US$1.8 billion in 4Q2023, based on JLL data (Picture: Samuel Isaac Chua/The Edge Singapore)
Asia Pacific (Apac) commercial real estate investments clocked US$31.6 billion ($42.4 billion) in 4Q2023, growing 3% y-o-y, according to data compiled by JLL. The consultancy adds that this marks the first quarter of increasing volume after seven consecutive quarters of decline.
This brings Apac real estate investment volume to US$106.8 billion for the whole of 2023, representing a 17% fall from the year before.
China was the most active market in 4Q2023, growing 50% y-o-y to hit US$11.1 billion in investment volume. JLL attributes this to assets being offloaded by indebted developers seeking to alleviate liquidity issues. Japan, the second most active market, saw US$4.4 billion in investment volume, dropping 53% y-o-y as investors showed concern over the Bank of Japan ending its negative interest rate policy.
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Australia posted US$4.3 billion in investment deals, up 14% y-o-y, driven largely by improvement in its retail sector. In South Korea, capital transactions dipped 7% y-o-y to US$4.2 billion amid cautious investor sentiment. In contrast, Hong Kong's investment volume grew 6% y-o-y to US$1.8 billion.
In Singapore, commercial real estate investment volume dropped 29% y-o-y to US$1.8 billion. However, the city-state emerged as the most active cross-border investor, accounting for 36% of the US$3 billion in Apac cross-border investments logged in 4Q2023.
For 2024, JLL believes interest rate movements will play a key factor in investment activity. “While the cost of debt remains elevated, investors across Asia Pacific are still erring on the side of caution,” notes Stuart Crow, CEO, Asia Pacific Capital Markets, at JLL.
He continues: “The prospect of interest rate cuts in 2024 may potentially reverse current trends, but we can expect greater sector diversification among investors – particularly towards sectors such as logistics and industrial and living, which have seen high investor conviction across the region.”