JLL Data Shows That Q4 Investments Totaled $31.6 Billion, Reversing A 7-Quarter Slump JLL’s new data indicates that commercial real estate investment in Asia Pacific increased 3% year-on-year (YoY) during Q4 2023 to $31.6 billion reversing seven consecutive quarters of declining volumes and total annual investment decline by 17% YoY to reach $106.6 Billion for 2023.
China led Asia Pacific’s investment recovery for a second successive quarter, recording a 50% YoY increase to $11.1 billion. Logistics (down -5% to $6.5 billion) and living (up 24% to $1.5 billion) performed better than other sectors; especially within China itself. Investments in office properties remained limited by uncertainty regarding interest rate movements, repricing and occupancy issues.
“Despite rising debt costs across Asia Pacific, investors remain prudent. While interest rate cuts in 2024 may reverse current trends, we anticipate greater sector diversification from investors – specifically towards logistics, industrial, and living industries that have garnered strong investor commitment across the region,” according to Stuart Crow, CEO, Asia Pacific Capital Markets at JLL.
While China was the most active market during Q4, Singapore saw the steepest annual investment volume decline of 29% YoY to $1.8 billion. Cross-border investments across Asia Pacific also declined significantly year over year to $3 billion during this quarter; yet Singapore stood out as an active cross-border investor by making numerous hotel and logistics acquisitions across its region – accounting for 36% of quarterly investment volume.
Australia ($4.3 billion) and Hong Kong ($2.1 billion) experienced YoY increases in investment volumes of 14% and 6% respectively, driven mainly by retail sector advancement; Hong Kong’s quarterly performance was buoyed by two substantial office purchases made for occupation purposes.
At the same time, investment volumes in Japan saw a 53% year-on-year drop, as concerns regarding the Bank Of Japan (BOJ)’s move away from negative interest rate policy diminished investor enthusiasm for office assets.
South Korean office markets saw large office transactions contribute to their $4.2 billion investment volume for Q4 2023 – down 7% YoY. Leasing markets continued their positive performance with low vacancy and positive rental growth rates; however, investor activity decreased due to cautious investor sentiment.
2023 saw an overall decline in dry powder levels, suggesting investors deployed capital into Asia Pacific commercial real estate market and took a long-term view despite market challenges. 2024 will remain an uncertain year with interest rate movements likely determining investment activity as selling pressure mounts across some larger markets,” according to Pamela Ambler, Head of Investor Intelligence Asia Pacific at JLL.