SINGAPORE (EDGEPROP) - International real estate consultant JLL forecasts that Asia Pacific real estate investment could rebound in 2021, with direct transactions set to increase by between 15% and 20% y-o-y. This follows a contraction in 2020 when overall real estate investment volumes in the region declined by 20% y-o-y.
According to JLL, investment volume last year could have performed worse, but the market was buoyed by an uptick in investment transactions in 4Q2020.
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Real estate markets in North Asia were the most resilient in the last quarter of 2020. China recorded a 21% q-o-q increase in transaction volumes, while Japan and Korea saw a 37% q-o-q and 16% q-o-q jump respectively. This resilience is attributed to stronger economic recovery and deep pools of domestic capital, says JLL.
On a sector basis, transaction activity in logistics and multifamily assets jumped 29% y-o-y and 26% y-o-y respectively. These two asset classes comprised about 30% of the total real estate investment volumes in 2020.
In comparison, hotels, retail, and office real estate transaction activity each fell by about 25% y-o-y, as these sectors were most affected by the Covid-19 pandemic.
“Investors undoubtedly faced a challenging operating environment in 2020, but our interactions have confirmed that they refocused strategies and reaffirmed their commitment to the region. Given that transactions approached pre-pandemic levels in the fourth quarter, we expect investor confidence to grow in 2021 as capital adapts and the longer-term opportunities in the region become clearer,” says Stuart Crow, CEO of capital markets, Asia Pacific, JLL.
Alternative asset classes such as logistics, multifamily, and data centres are expected to drive investment activity this year. Meanwhile, office, retail, and hotel investment deals could grow in tandem with economic growth.
“In a low growth, low rates world, the attractiveness of sectors with higher yields and historically lower rental growth can become more pronounced, and we expect logistics, data centres, and multifamily to be the beneficiaries of increased capital allocation,” says Regina Lim, head of capital markets research, Asia Pacific, JLL.
She expects these alternative assets will become a core part of investment portfolios over the next few years. This year could also see a shift in asset allocation towards more opportunistic and value-add strategies, says Lim. This includes office assets with flexi-space and collaborative work spaces in the building, says JLL.