APAC Real Estate Investment Reaches $27B in Third Straight Quarter of Growth: JLL

Commercial real estate investment in Asia Pacific rose 2 percent year-on-year in the second quarter of 2024 to hit $27.3 billion, marking a third straight quarter of growth, according to JLL.

First-half investment volume totalled $57.5 billion, up 7 percent from year-earlier levels, the consultancy said in its Capital Tracker update. Cross-border deals during the six months amounted to $7 billion, tumbling 38 percent year-on-year, as domestic investors dominated in key markets like mainland China and Hong Kong.

Japan was the most active market in the region during the second quarter, recording $5.8 billion in trades, as a weak yen and booming tourist arrivals drove a surge of hotel deals in Asia’s second-largest economy, JLL reported.

Japan’s headline deal was BentallGreenOak’s purchase of the Hommachi Garden City complex in Osaka from Sekisui House REIT, with the North American investor paying $137 million for the hotel portion and $286 million for the office section.

“The cost of borrowing is mostly still elevated in Asia Pacific markets except Japan,” said Stuart Crow, JLL’s CEO of APAC capital markets. “This has resulted in real estate assets in the region facing repricing pressure across the office, retail and logistics sectors.”

Strata Sales Lift Singapore

Southeast Asian powerhouse Singapore saw $1.9 billion in second-quarter deals, up 31 percent year-on-year, with strata sales fuelling office transactions as occupiers and family offices sought buying opportunities.

The city-state’s top office deal of the quarter was the CDL-led acquisition of Delfi Orchard for $324 million. SGX-listed City Developments Ltd, controlled by billionaire Kwek Leng Beng, was awarded the rights to the strata-titled, 11-storey building near the intersection with Claymore Road in a collective sale.

Australia also witnessed a surge in deal activity, with volume jumping 73 percent year-on-year to $5.4 billion in the quarter as capital allocation to office and industrial assets rebounded strongly.

The largest Down Under deal tracked by JLL was Mitsui Fudosan’s $857 million purchase of a 66 percent stake in a Sydney office project, 55 Pitt Street, which Japan’s largest developer now co-owns with ASX-listed property giant Mirvac.

Regionwide, office remained the most active sector in the second quarter with $10.7 billion in volume, up 5 percent year-on-year, followed by logistics at $5.6 billion (down 27 percent) and retail at $4.6 billion (up 12 percent).

Data Centres Stand Out

Digital infrastructure has emerged as a bright spot, particularly in Southeast Asia, where investment in data centres made up 52 percent of overall APAC volume in the first half, according to JLL.

Notable closings included GDS’s sale of a 43.9 percent stake in the DigitaLand platform for $587 million, as well as BDx’s acquisition of a portfolio of facilities from Indonesia’s Indosat for $168 million.

“With expectations for the US Federal Reserve to lower interest rates come September, we look forward to an easing of borrowing costs to follow in the region,” said Pamela Ambler, JLL’s APAC head of investor intelligence. “Coupled with the buzz in Southeast Asia’s data centre sector, we look forward to seeing how these factors will steer commercial real estate investment in the region.”