Property Divestment By Asia Pacific Firms Hit US$44.4Bil In 2021
ASIA PACIFIC – Capital markets data from CBRE showed that corporate real estate investors in the Asia Pacific (APAC) region completed the sales of US$44.4 billion (S$61.12 billion) worth of properties in 2021, reported The Edge on Monday noon (23 May, SGT).
Overall, corporate real estate investors completed 762 property divestments last year, as they took advantage of healthy pricing to divest some assets.
Notably, roughly 73 percent of corporate property sales in Asia Pacific last year were made up of typical disposals, and the transactions generally involved the divestment of older assets that commanded robust pricing because of bullish market conditions. CBRE revealed that most acquirers tend to enter into these deals with the intent to carry out value-add or development strategies.
On the other hand, the remaining 27 percent of corporate real estate sales in the region were comprised of leaseback deals. Firms adopt this type of deal to improve their balance sheet and reinvest their core business. Most of these acquirers were institutional investors and core funds.
In particular, the industrial segment accounted for 24 percent of the typical divestment and 34 percent of sale leaseback deals in 2021. The sector saw various types of companies with different reasons for selling real estate. For instance, some airline firms divested some assets to raise capital, while logistics companies sought to monetise assets by taking advantage of favourable market conditions for industrial real estate.
Mainland China saw the bulk of the real estate divestment activity, with sales reaching US$13 billion in 2021. Most deals involved the sale of development sites and older assets for redevelopment purposes.
Meanwhile South Korea also recorded a notably high volume of corporate property divestments of around US$7.5 billion. Most deals involved older retail and office assets for redevelopment.
Looking ahead, CBRE expects 2022 to be another solid year for corporate real estate divestment in the region, with sales activity forecasted to increase by between 5 percent to 10 percent this year.