Property Investment In Asia Pacific To Fall 25% This Year

ASIA PACIFIC – Jones Lang LaSalle (JLL) expects total real estate investment in the region could plunge by 25 percent year-on-year for the whole of 2022. And next year, it could drop by 5 to 10 percent, reported The Edge on Tuesday afternoon (20 December, SGT).

“Optimism driven by the idea of the pandemic coming to an end has slowly given way to caution amid concerns about inflation, interest rates and geopolitics. While the Asia Pacific region is likely to fare better due to more resilient domestic demand, it will not be left unscathed from the broader challenges,” said JLL’s Chief Research Officer for Asia Pacific Roddy Allan.

Despite the headwinds, the property consultancy thinks that investors will look for assets that benefit from structural tailwinds and could generate higher potential returns during downturns. These property types include logistics, data centres, and multifamily residential properties.

In the office market, upgraders are expected to continue to drive up the demand for high-quality, premium commercial properties. This means that superb office space, especially those with green credentials, will greatly outperform the rest of the office sector in key gateway cities across Asia Pacific.

As a matter of fact, JLL noted that nearly 75 percent of surveyed companies are willing to pay a higher office rent to occupy buildings with sustainability credentials.

This also presents opportunities due to a supply-demand gap of such commercial properties, as the present stock of green-certified buildings in the region is just 40 percent of the total Grade A office supply and this is not enough to meet the ambitious net-zero targets set by office tenants. JLL also said that office occupants in the region are targeting to have market-recognised green credentials for at least half of their property portfolio by 2025.

Meanwhile, JLL thinks that Singapore will continue to attract capital thanks to its status as a “safe haven” and its sound property fundamentals, while Australia’s “highly transparent framework and low beta characteristics to draw core investors.”

“The 2023 outlook for Asia Pacific’s real estate markets is clouded as uncertainty persists. While the near-term outlook for real estate appears challenging, it also presents many opportunities,” said Allan, who believes the economic disruption in 2023 could be “relatively short and shallow”.