According to the real estate consultancy, foreign investments into Asia Pacific are at a decade-high, making up 35 per cent of total volumes, mostly driven by private equity funds and large-scale transactions.
“Real estate in Asia Pacific has gained favour in the last year as investors continue to seek high yields and stability amid a climate of geopolitical uncertainty and slowing economic growth. As an increasing amount of capital is being allocated to real estate, we’re seeing more clients making larger-scale investments to expand their portfolios.”
Stuart Crow, CEO, Capital Markets Asia Pacific, JLL.
“Over the next two years, we expect global real estate transaction volumes to stay elevated and Asia Pacific to outperform Europe and the Americas with an outsized portion of global investor interest.”
JLL reveals five key trends that investors should look out for in 2020.
1. Logistics assets are a hot ticket
Investor appetite for logistics continues to pick up, meaning these types of facilities are held tightly. The result is that investors must become more creative in order to access quality assets.
“We’re seeing more investors form joint ventures with major established players. Some are taking partial stakes or even going into public markets. A recent example is Canadian pension fund OMERS’s cornerstone investment in ESR logistics platform when the latter filed to be listed on Hong Kong’s stock exchange,” says Mr Crow.
“Another avenue to accessing quality portfolios has been via the mergers and acquisitions route, with the likes of warehouse operator GLP, Viva industrial REIT and Propertylink REIT among some of the larger platforms to be acquired.”
2. REITS are the next to watch
In 2019, Asia Pacific REITs (Real Estate Investment Trusts) raised a record amount of capital at over US$14 billion, surpassing the previous record of US$13.8 billion in 2013.
JLL predicts that Singapore and India will see more REIT initial public offerings next year, mainly driven by their focused growth strategies and consistent trading performance. More strategic mergers and acquisitions will allow funds to grow geographically and deepen their investments into newer markets in U.S. and Europe.
“Looking ahead, REITs are likely to continue their strong trading performance and be highly competitive buyers of real estate assets. Size matters and we can expect to see more consolidation in this sector.”
STUART CROW, CEO, CAPITAL MARKETS ASIA PACIFIC, JLL.
3. Sustainability initiatives present investment opportunities
The next generation of buildings is set to become more ‘green’, with sustainable technologies to save on operating costs as well as innovative design to attract more occupiers and tenants, says JLL. Recently, Singapore-listed Keppel REIT has obtained a green loan facility to grow its green building portfolio.
Mr Crow explains: “We believe that governments in this region are sustainability conscious and proactive in transforming their cities to make them smarter and more livable. These initiatives present opportunities for astute real estate investors, either by acquiring or developing sustainable assets, or being a part of the city redevelopment process.”
Singapore, for instance, has started on its sustainability journey with the decentralisation of its CBD, encouraging the redevelopment of older office buildings into mixed-use integrated developments and reducing the use of private transport. Similarly, Beijing has restricted the size of commercial developments in the central area and targets to reduce the population in its six central districts by 15 per cent from 2014 levels.
4. Innovative cities will dominate office markets
According to JLL’s latest Premium Office Rent Tracker, technology firms – particularly online…