Everything you need to know about the APAC property market’s 2022 recovery

Total investment volumes are expected to be 15% more than 2021 figures.

Asia Pacific’s commercial property market will stabilize further in 2022 as investment and leasing activities are poised to accelerate. 

JLL expects 2022 investment volumes to be around US$200 billion or over 15% above the full-year estimate for 2021, which currently stands at US$162-169 billion. This forecast is despite renewed uncertainty over the societal and economic impact of Covid-19.

According to JLL, in 2022 several themes will fuel heightened investment activity and support ongoing recovery in leasing across asset classes, including a stronger office market, high demand for modern logistics facilities, and the continued growth of alternative sectors such as data centres and life sciences. 

“Asia Pacific’s real estate markets will enter 2022 stronger than a year earlier, as investors maintain their bullishness and leasing activity continues to further recover,” says Anthony Couse, Chief Executive Officer, Asia Pacific, JLL.

“It’s clear that the path to economic recovery is not a straight one, but we’re hearing from our clients that they have confidence in the future of office-based work. Investor sentiment is positive though uncertainty remains the reality and will be factored into any decision-making in the year ahead.”

JLL forecasts the volume of capital targeting real estate will remain steady throughout 2022 with investors deploying more funds towards opportunistic investments in markets including China and Japan. 

In 2022, Asia Pacific’s office market will add 6.9 million sqm in supply, up 13% from this year. JLL predicts net absorption levels to rise by 20% next year, driven by expansion of financial, technology and flexible space operators.

Prime logistics stock is set to grow by 17% between 2021 and 2022, the fastest pace of annual growth on record, with 20.8 million sqm of new supply expected to be delivered. As a result of increasing stock and portfolio reallocations, JLL forecasts logistics investment to rise to US$60 billion annually by 2025.

Hotel investments are also expected to rise by up to 30% in 2022, crossing the US$9 billion threshold next year, as confidence builds in the hospitality sector. 

Investor and occupier demand for data centres will continue to grow in 2022. The hyperscale cloud market will expand by 400% from US$37 billion in 2021 to US$179 billion* by 2026, creating ongoing demand for real estate to support expansion.

While the life science sector remains niche for some Asia Pacific investors, the region will offer diverse opportunities in terms of location and asset class as occupier demand continues to grow in 2022. 

“The real estate market in Asia Pacific has faced unprecedented challenges in 2021. While 2022 will come with some risks, investors with a long-term view remain confident in the secular trends that will drive demand in this region: ongoing urbanization; increasing prosperity and a growing middle class; and the acceleration of e-commerce. All of these point to opportunities for investors,” says Roddy Allan, Chief Research Officer, Asia Pacific, JLL.