Asia-Pacific real estate transactions up 35% on quarter in Q3, down 19% on year

REAL estate investment in the Asia-Pacific was down 19 per cent year on year at US$35 billion in the third quarter, but signs of recovery are emerging as transactions picked up 35 per cent quarter on quarter.

According to a report by real estate consultancy JLL, the pickup in Q3 was fuelled by transactions in North Asia, specifically China, South Korea and Japan. South Korea was down 2 per cent year on year for the quarter under review, while China and Japan were down 10 per cent and 18 per cent respectively.

"While uncertainty will remain for the foreseeable future, we believe that low transactional activity has bottomed out and our optimism for the fourth quarter continues to grow," said Stuart Crow, JLL's chief executive officer (capital markets) for the Asia-Pacific.

The report also highlighted that investors showed an interest in real estate assets linked to logistics and data centres, with transactions in the industrial market spiking 76 per cent year on year. On the other hand, office transactions in the Asia-Pacific dropped 35 per cent year on year, while retail and hotel transactions in the region saw sharper falls, slumping 51 per cent and 87 per cent respectively.

More institutional investment managers returned in the third quarter after sitting on the sidelines in H1 2020, with activity in the first six months of the year driven largely by private investors. One reason could be the cheaper cost of capital after financing costs fell 50 to 100 basis points year to date, JLL noted.

On the Singapore market, JLL said: "We expect more rarely traded, tightly held assets to be available for buyers who are courageous enough to take a view."

Year to date, Tokyo and Seoul are leading when it comes to global investments. JLL singled out its top picks as multi-family assets in Japan, as well as logistics assets in Shanghai and Seoul.