Double-Digit Growth Projected for APAC Property Investment Through 2023

Despite a COVID-led easing in the current quarter, Asia Pacific’s real estate transaction volume is on track for double-digit growth in 2022 and 2023 as an economic recovery invigorates the occupier sector, according to a report from Cushman & Wakefield.

The forecast comes after global deal volume jumped 55 percent to hit a record high last year, driven by a 92 percent surge in the Americas following a 29 percent drop in that region during 2020, the property services firm said in its 2022 Signal Report on commercial real estate investing.

APAC had been leading the recent recovery before the emergence of the Omicron virus variant, with an earlier return of growth and pre-pandemic levels of investment activity in most markets. Investment volume in the region exceeded pre-COVID levels last year after a comparatively mild 10 percent drop in 2020.

“Asia Pacific enters 2022 with strong underlying momentum but greater than expected short-term headwinds from the spread of Omicron and rising geopolitical risk,” said Dominic Brown, head of insight and analysis for Asia Pacific at Cushman & Wakefield. “However, the momentum will assert itself in Q2, building upon the region’s re-emergence from prolonged lockdowns.”

Beds, Sheds and Meds

Cushman & Wakefield pointed to the global mainstreaming of rental residential, logistics and life sciences properties — what the agency calls “beds, sheds and meds” — as a key investment theme, offering growth potential and risk reduction.

For core property investment in Asia Pacific, the firm favours the living sectors in Japan and Australia, offices in Seoul, Tokyo, Singapore, Sydney and Beijing, and logistics in Singapore, Seoul, Sydney, Tokyo, Osaka and large cities in China and India.

For value-add investors, targets include business parks in tech-driven cities like Beijing, Tokyo, Seoul, Bengaluru, Singapore, Hyderabad and Pune, while opportunistic potential is in sight for hospitality assets in Singapore, Japan, Hong Kong, China and India.

After a COVID-induced stumble in the first half, APAC will regain the top spot in terms of the pace of economic growth in the second half of 2022, Brown said.

“Occupier markets are therefore forecast to strengthen in the year ahead, with demand more widely spread across the region,” the analyst said.

Megadeals Endure

Even as the spectre of Omicron cast a pall on the regional economy, Asia Pacific saw a string of property megadeals in the opening months of 2022.

In the first week of the year, Hong Kong-listed developer Kerry Properties revealed plans for a supersized mixed-use project in Shanghai’s central Huangpu district after acquiring the land use rights to four development plots for RMB 13.3 billion ($2.1 billion).

Towards the end of January, Hong Kong private equity player PAG agreed to buy the Cross Street Exchange office and retail complex in Singapore’s central business district from Frasers Logistics & Commercial Trust for S$810.8 million ($603 million).

Also that month, defaulting real estate developer Shimao Group said it would sell the Hyatt on the Bund Hotel in Shanghai to a property investment firm controlled by the city government for RMB 4.5 billion ($707.5 million).

February saw the deal momentum continue, with big-ticket transactions including Indonesian lumber tycoon Sukanto Tanoto’s acquisition of the Tanglin Shopping Centre in Singapore’s Orchard Road area for S$868 million ($645.6 million) at a collective sale, as well as Singaporean sovereign fund GIC agreeing to pay JPY 150 billion ($1.3 billion) for Seibu Holdings’ portfolio of hotels and leisure properties in Japan.