JLL predicts 20% rise in real estate investment

Real estate investment in the Asia Pacific region is expected to rise by up to 20 percent this year amid increased interest in logistics and alternative assets such as data centers and multi-family or residential rental properties, according to global real estate consultancy JLL.

Investor appetite for assets with a stable income flow will boost transactions, it said in its latest forecast, with hotel, retail and office investments also gaining pace as economic recovery gathers momentum.

"Shifts in both investor appetite for core and alternative assets, coupled with occupier demand for spaces that align with a more sustainable and experience-driven environment, will become a more important strategic priority in the post-COVID world and a cornerstone of the market's ongoing recovery," said Anthony Couse, CEO of JLL Asia Pacific.

Despite the shift to home working in 2020, JLL said it remains confident office space would remain an integral part of most companies' future strategies, meaning investors will continue to view this asset favorably. A JLL poll of Asia Pacific corporate real estate leaders in 2020’s third quarter found that 94 percent were expecting to either retain or increase the amount of higher quality space in their portfolio.

Japan, China and South Korea, which made up three-quarters of transaction activity last year due to effective management of the virus, resilient economic performance and deep pools of domestic capital, are set to lead recovery in 2021 as their economies outpace regional counterparts, JLL said.

Investors are likely to focus more on cash yields, where logistics should outperform offices in most markets in Asia Pacific, JLL predicted.

The growth in multi-family and build-to-rent investments will also gain pace in 2021, driven by a new generation of renters, supportive government policy changes, and low interest rates that now undercut residential yields in many Asia Pacific cities, according to its forecast.