The Asia Pacific commercial real estate sector decreased 23 per cent compared to the fourth quarter of 2020, according to JLL’s Capital Tracker report.
JLL’s report said there had been $A43 billion in direct investments in the first quarter of 2021, which was a decline of less than 1 per cent year-on-year.
Australia saw volumes increase by 68 per cent year-on-year, with $A4.1 billion of transactions, which included the acquisition of Martin Metro Place South Tower by Investa and Manulife.
Majority of investment activity occurred in markets with strong domestic liquidity bases, with transactions in Japan ($A14.8 billion), China ($10.7 billion) and South Korea ($5.5 billion) comprised over 70 per cent of total investment volume in the first quarter – mirroring activity in 2020.
Singapore’s volumes surged by around 280 per cent year-on-year to $A3.2 billion, prompted by large investments by global players including the strategic investment of Allianz Real Estate into OUE Bayfront core asset.
JLL capital markets chief executive Stuart Crow said first quarter investment volumes are typically on the light side, irrespective of the year.
“Investors refine strategies, complete due diligence and search for new opportunities – 2021 was no exception,” he said.
“However, solid deal flow in the fourth quarter of 2020 coupled with record amounts of dry powder waiting to be deployed give us confidence that the recovery will gain further momentum as the year progresses.”
JLL head of capital markets research Regina Lim said logistics assets continued to attract investor interest in the first quarter, with volumes rising 26 per cent year-on-year and comprising 23 per cent of all transactions.
She added office space remains the region’s largest commercial real estate sector, with 47 per cent of all investment in the first quarter.
“Allocations to Asia Pacific will only grow in 2021 with transactions fuelled by recent activity in markets with strong domestic liquidity and the region’s attractiveness to global investors,” she said.
“Secular tailwinds will continue to accelerate the weight of capital into sectors like logistics, while new economy themes will drive capital allocations this year and beyond.
“We maintain that investment volumes will rise by 15 to 20 per cent in 2021, driven by structural growth in logistics, data centres and multifamily sectors, while office investments are likely to rebound in tandem with economic growth.”