SINGAPORE, 23 APRIL 2024 – Asia Pacific was the only region globally to see growth in commercial real estate investment in Q1 2024, with investment volumes reaching US$30.5 billion. According to data and analysis by global real estate consulting firm JLL (NYSE:JLL), commercial real estate investments rose by 13% year-on-year (YoY) in Q1 2024, marking the second quarterly YoY increase after seven consecutive quarters of decreasing volumes.

The increase in investment volume comes amid global investors making major acquisitions, while institutional investors continue to deploy capital. North Asia led the growth of the region, with Japan emerging as Asia Pacific's most active market, with an investment of US$11.5 billion, a 29% YoY increase, across the quarter. Domestic buyers focused on core assets in Japan, while foreign capital demonstrated interest in opportunistic investments. Overseas investors remained interested in Japan, with large acquisitions made in the office, logistics and industrial sectors, due to its loose financial conditions, positive yield spreads, and weak currency.

South Korea attracted US$4.3 billion in investments, a significant 73% YoY increase, with office dominating the sector for investment given its stable fundamentals, low vacancy rates and bullish leashing demand. Singapore (US$2.2 billion) recorded a 14% YoY growth in investments owed to capital allocation pivoting towards retail assets, which have a positive rental outlook and yield spreads.

"The first quarter reflects a continued appetite from investors looking to capitalise on Asia Pacific's strong economic fundamentals and attractive pricing opportunities across markets and asset classes," said Stuart Crow, CEO, Asia Pacific Capital Markets, JLL. "We're seeing renewed interest from domestic and cross-border sources targeting a diverse range of risk profiles."

Across Asia Pacific, office remained the most active sector, though volumes dipped 1% YoY (US$ 12.6 billion). Logistics and industrial and retail all recorded volume growth at 36% (US$7.8 billion) and 8% (US$5.7 billion) YoY, respectively. Additionally, cross-border sectors such as logistics and industrial, retail, and living witnessed YoY growth despite pricing uncertainty sentiments, which continued to keep cross-border activities modest.

Within the region's other major economies, Australia (US$3.0 billion), China (US$5.6 billion) and Hong Kong (US$0.7 billion) experienced a decline in investment volume compared to the previous year. Australia and China saw a deterioration of a 19% YoY drop, while Hong Kong registered a more substantial 54% YoY decrease.

"Uncertainty surrounding interest rates continues to influence investment activity in Asia Pacific, but we've seen a partial rebound and recovery in 2024 as markets recalibrate their expectations," said Pamela Ambler, Head of Investor Intelligence, Asia Pacific, JLL. "Sentiment continues to be influenced by the strong U.S. economy despite higher base rates, potentially leading to a prolonged path to the beginning of a reduction cycle. Looking ahead, we expect further investment activity as repricing sets new benchmarks for trade, and investors adapt their portfolios and strategies to the current rate environment."

Learn more in JLL's Q1 2024 Capital Tracker.