Office Property Investments In Asia Pacific

Office Property Investments In Asia Pacific Down 33%

ASIA PACIFIC – Data from Jones Lang LaSalle (JLL) showed that office transactions in the region declined significantly by 33 percent year-on-year in Q3 2022, reported The Business Times on Tuesday noon (18 October, SGT).

According to the real estate consultancy, Asia Pacific’s office market was impacted by a slowdown in commercial property transactions in certain markets, as sentiment weakened amid a widening gap between the prices expected by buyers and sellers.

Nonetheless, investment volume across all property types was solid in Singapore, where investment activity surged by 116 percent thanks to major office deals following a low base in Q3 2021. Similarly, real estate investment in Australia increased by 15 percent on an annual basis because of several high-profile office transactions in Melbourne and Sydney.

On the other hand, property investment volumes in China, Japan, and Hong Kong fell sharply by 55 percent, 61 percent, and 75 percent respectively. These 3 markets were partly responsible for the drop in overall real estate investment activity across the entire region.

In total, property investment volumes in Asia Pacific fell 29 percent year-on-year to US$28 billion during the 3rd quarter of the year.

Apart from the large drop in the aforementioned 3 markets, other factors that reduced real estate investment in Asia Pacific was the rapid strengthening of the US dollar against currencies in the region, fewer assets changings hands in major markets, and an increasing cost of debt triggered by the aggressive tightening of interest rates in the United States.

The weakening of property investment volumes in the region was “not surprising,” in light of the high deal base last year coupled with policy-related, economic, and geopolitical factors, commented Pamela Ambler, Head of investor intelligence for Asia Pacific at JLL.

“Investors are understandably treating capital deployment strategies differently given the fluid external environment, and we’ll likely see some decision delays in the fourth quarter while awaiting more market clarity on the state of the global economy,” she explained.

“In the interim, we expect the level of repricing to sharpen and the price discovery phase to extend throughout next year,” Ambler added.

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