Investors expect Asia Pacific real estate investment to accelerate in 2021

By Timothy Tay

/ EdgeProp Singapore |

August 24, 2020 2:55 PM SGT

Most investors expect a recovery over the next six to 12 months, and highlight Japan, South Korea, China, and Australia as markets that will see the most transactional activity.

Investors also plan to increase their real estate investment exposure to logistics, multifamily, and alternative assets.

Respondents also cited market uncertainty as the reason for the pause in transactional activity over the past few months, says JLL.

SINGAPORE (EDGEPROP) - Based on a JLL survey of 38 global real estate investors, close to 84% of surveyed investors expect transaction volumes to recover by 2H2020 and 52% expect recovery in 2021. The surveyed investors collectively hold assets under management worth close to $2 trillion.

Asia Pacific real estate transaction volumes totalled $52.9 billion in 1H2020, representing a $40.3 billion decrease compared to the same period last year, based on data from Real Capital Analytics.

Market uncertainty is driving the pause in transactional activity. Specifically, underwriting assumptions, rent assumptions, vacancy forecasts, cost of capital and pricing uncertainty were the primary reasons stopping capital deployment, says JLL.

But with a recovery expected over the next six to 12 months, many investors identify Japan, South Korea, China, and Australia as the markets most likely to record an increase in transactional activity in 2021, says JLL.

“Our interactions with clients reinforce the view that investors will continue to seek defensive locations and sectors where the rental collection experience has been positive. Japan and Korea remain high on the preferences for clients, as do sectors such as multifamily, non-discretionary retail and logistics,” says Stuart Crow, CEO of capital markets, Asia Pacific, at JLL.

Singapore remains a focus for investors and 44% of respondents say they plan to increase their exposure in the country by the end of 2021. “We anticipate offshore capital to comprise a large proportion of investment activity here,” says Ting Lim, head of capital markets at JLL Singapore.

As a key financial gateway city in Asia Pacific, Singapore will likely remain an attractive investment destination for many global and regional investors, says Ting Lim, head of capital markets at JLL Singapore. (Picture: Albert Chua/The Edge Singapore)

In general, investors plan to boost their exposure to logistics, multifamily, and alternative assets, as well as focus on capital value preservation by investing in core sector assets such as offices. While direct acquisition will remain the primary transaction route, 32% of surveyed investors plan to increase their exposure to platform or entity deals, while 29% plan to increase their activity in debt markets.

“While we typically see a shift to more stable risk profiles during times of uncertainty, many investors are signalling not only a longer-term diversification strategy in Asia Pacific but are also reimagining how they transact in this region,” says Roddy Allan, JLL chief research officer, Asia Pacific.

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