Despite macroeconomic challenges and the highly unpredictable nature of the coronavirus outbreak, longer-term investor sentiment remains “extremely positive”, says Stuart Crow, CEO of capital markets in Asia Pacific at JLL. “We foresee investor strategies becoming more selective and further diversification into the logistics, living and data centre sectors.”
The continued low interest rate environment and supportive central bank policies is also expected to offset some of the macro headwinds this year, and provide further confidence to investors’ cross border strategies, says Crow.
According to Regina Lim, executive director, Asia Pacific capital markets research at JLL, “investors will remain highly selective in their capital allocations in Asia Pacific. A shortage of supply will likely prompt investors to rethink medium-term strategies and look more closely at alternative asset classes across the region”.
Last year, global commercial real estate investment stood at US$245 billion ($341 billion), bringing the full-year activity to US$800 billion, and up 4% y-o-y. But JLL expects global investment in commercial real estate to slide to about US$780 billion this year. Investors will exercise caution and selectivity especially given the limited availability of assets, and this could negatively impact transaction volumes.
In the Asia Pacific, JLL says that the region saw a robust start to the year, and a rise in investment activity centred around core markets such as China, Japan, Singapore, and South Korea. Meanwhile, political uncertainty continues to impact Hong Kong where investment fell 53% y-o-y in 2019.
Globally, REITs have outperformed other global asset classes over the last 10 years, producing annualised total returns of 11%, compared to single-digit performances from global equities and fixed income funds. JLL says it expects more listings in Singapore and India this year will further diversity the regional REIT base.
Source: Edge Property News