APAC investment volume to rise by up to 20% this year

Thanks to growth in logistics, data centres, and multifamily investments.

In 2020, volumes fell 20% yoy and 4Q20 volumes were flat yoy. According to JLL, volumes were resilient in China, Japan, Korea and Taiwan, where economic recovery was stronger and there are deep pools of domestic capital. India deals were supported by the REIT sector.

By sectors, hotels, retail and office transactions were the most impacted, falling over 25% yoy. Multifamily and logistics investments made up nearly 30% of volumes. “We expect investment volume to bounce 15-20% in 2021, due to growth in logistics, data centres, multifamily investments; while office, retail and hotel investments are likely to rebound in tandem with economic growth.”

Here are 5 key property themes JLL expects for this year:

1. JLL expects Asia Pacific direct real estate transactions expected to rise 15-20% in 2021.

Volumes fell 20% yoy in 2020; 4Q20 volumes were flat yoy as investment managers returned to the market

We expect continued interest in resilient assets such as logistics, multifamily and datacenters, while office, retail and hotel deals should grow in tandem with economic growth

2. In this extended low returns, low interest rate environment, expect further yield compression for high yield, low growth assets:

In 2020, multifamily yields in Japan compressed by c. 50bps and logistics yields compressed by up to 75bps in the region.

Prime office yields compressed 15-20bps in Singapore, Seoul and Beijing in 2020. Office yields are likely to be stable in 2021.

3. Asset allocation shifts are structural, not cyclical; towards greater diversification, more opportunistic, value-add strategies:

Most investors are still under-allocated to logistics and multifamily assets – these will become core part of portfolios

We expect hotel volumes to rise 25% yoy in 2021; multifamily funds and deals to double over 3 years

Interest in datacenter, self storage funds and development assets to grow further in 2021

Office assets still core for most investors, expect more value-add strategies

4. REITs will continue to de-risk investments in India; SREITs could spend USD 10-12bn offshore in 2021.

5. Our top picks:

Shanghai Logistics
Seoul Logistics
Tokyo Logistics
Melbourne Logistics
Singapore Office
Tokyo Multi-family

Get the full report here.

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