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Apac commercial real estate investment still subdued in 2Q2024: MSCI

/ EdgeProp Singapore |

August 20, 2024 6:57 PM SGT

Apac saw US$32.4 billion worth of commercial real estate deals in 2Q2024, down 17% y-o-y (Picture: Samuel Isaac Chua/The Edge Singapore)

Asia Pacific (Apac) registered a further decline in commercial real estate investment volume in 2Q2024, underpinned by a continued lacklustre market, according to MSCI’s latest Asia Pacific Capital Trends report.

Apac logged US$32.4 billion ($42.4 billion) worth of completed commercial real estate deals in 2Q2024, sliding 17% y-o-y. This brings sales activity to US$70.4 billion in the first half of the year, down 7% y-o-y.

Y-o-y change in deal volume

Source: MSCI

MSCI attributes the lower figures to muted activity in the region's two biggest markets — China and Japan. China recorded a 19% y-o-y decline in investment volume to US$8.2 billion in 2Q2024, while Japan saw a 39% y-o-y plunge in sales volume to US$6 billion over the same period. “China’s slide came alongside weaker-than-expected GDP growth, while expectations of an interest rate rise in Japan took centre stage,” notes Benjamin Chow, head of real assets research for Asia at MSCI.

Most active Asia Pacific markets

Source: MSCI

Nonetheless, Chow highlights divergences across different Apac markets. “One key takeaway at the mid-year mark is that price adjustments across the high-interest markets in Asia Pacific are finally stimulating demand,” he says.

According to MSCI data, while deal volume in major Apac markets besides China and Japan stayed relatively flat, the number of deals rose for a second consecutive quarter. MSCI adds that these markets, which have higher interest environments compared to China and Japan, are seeing demand buoyed by the prospect of interest rate cuts on the horizon.

In terms of property type, hotels were the only sector where aggregate Apac deal volumes increased in 2Q2024. The segment saw a 57% y-o-y surge to US$5.4 billion in volume. Office investment volumes logged an eighth consecutive quarter of decline, falling 12% y-o-y to US$11.3 billion, while the industrial and retail segments reported 35% and 18% y-o-y falls to US$7.2 billion and US$6.5 billion respectively.

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