Larger Commercial Property Deals In Asia Pacific Expected In 2022
ASIA PACIFIC – A series of large commercial property transactions were signed in the region recently, indicating rising confidence for a sector where allocations continue to rise. And bigger commercial real estate deals are expected to emerge this year, according to a report from Jones Lang LaSalle (JLL) that was published on Thursday (17 February, SGT).
For instance, Frasers Commercial Trust sold Cross Street Exchange, a mixed-use project in Singapore’s central business district (CBD) for S$811 million (US$602 million) in January 2022. Less than two weeks later, the ARA-owned Alpharium Tower office building in Pangyo, South Korea, was purchased by Seoul-based Mastern Asset Management via a US$853 million transaction.
Real estate consultancy JLL noted that such large commercial property deals had become rarer during the early months of the COVID-19 pandemic. Then, interest in deals valued at more than US$300 million begant to stage a comeback in 2021.
“Investors remain underinvested in Asia Pacific property. Larger deals and platform acquisitions will become commonplace this year as investors put capital to work to expand their presence in the region’s real estate sector, which is poised for a strong recovery as economies reopen,” explained JLL’s Chief Executive for Capital Markets in Asia Pacific, Stuart Crow.
A similar trend occurred in Europe, where a pick-up in big-ticket office transactions were seen after a pause in trading during the height of the COVID-19 pandemic.
Looking ahead, deal sizes are forecasted to keep increasing in Asia Pacific for 2022, due to the large amount of capital seeking commercial property investment, amidst portfolio under-allocation at its most severe level in seven years.
According to JLL, Asian institutional real estate investors may have to deploy 34 percent more capital into property assets to meet the 11.5 percent target allocation for this asset type.
“With record amounts of dry powder and an expanding appetite, we expect increased momentum in 2022 and remain steadfast in our view that investment volumes will cross the US$200 billion mark this year,” added Regina Lim, Head of Capital Markets for Asia Pacific at JLL.