APAC commercial property investors are placing their money in safe haven markets with the United Kingdom, United States and Singapore the top three destinations, according to research from Knight Frank. The consultancy found commercial transaction volumes in Asia-Pacific rose by eight percent year-on-year reaching USD53 billion during the first quarter. Even greater activity is predicted moving forward.
“Even with macroeconomic and geopolitical headwinds, investors have sustained their allocations to real estate in the last quarter. The fundamentals of investment market are sound, although growth rates are moderating on the back of higher borrowing cost and inflationary pressure. Acquisitions by Asia-Pacific REITs who are facing pressure to scale up will drive momentum in the coming year, and we expect activity to strengthen in the second half of 2022,” Christine Li, Knight Frank Head of Research, Asia-Pacific, explained.
According to Knight Frank, South Korea, Singapore and Australia were the most active among APAC commercial property investors. The office sector was their primary focus with transactions here accounting for around 41 percent of total investment volume. Industrial expenditure declined in the first quarter when compared to 2021, but there was a spike in hotel deals.
“Well-located, sustainable office assets remain highly sought-after by investors in the region, reflected in the elevated number of office deals transacted in the last quarter,” Neil Brookes, Knight Frank Global Head of Capital Markets, reported. “With more Asian economies reopening, investors looking to move up the risk curve will increase their exposure in hospitality and retail assets in search of higher yields amid the recovery of these sectors.”
With travel restrictions being eased, APAC commercial property investors will increase their deal making to close out the year. Singaporean outbound investment, in particular, bears watching.
“With the easing of travel restrictions, Asia-Pacific investors are now able to travel more frequently to inspect deals, retracing their pre-pandemic steps globally. Singapore remains the powerhouse of the region, with one out of every two outbound deals involving Singaporean capital which is focused on the core markets of the UK, US and Australia, with allocations spread evenly across sectors,” Brookes concluded.