Competition for Asia Pacific real estate assets to intensify in 2022

Shanghai, 30 March 2022 – Investor confidence in Asia Pacific real estate remains strong, but heightened competition for assets will emerge as a more considerable challenge for investors in 2022 when deploying capital. According to data and analysis published in JLL’s (NYSE: JLL) Investor Sentiment Barometer 2022, 82% of investors identified competition for assets as a significant challenge to their investment strategies in 2022.

The majority of investors, nine in 10 respondents surveyed by JLL, expect increased capital deployment towards Asia Pacific real estate in 2022. The same group of investors also recognized the need to diversify deployment strategies to offset intensifying competition for assets. According to JLL analysis, many investors plan to diversify across sectors and deploy capital, with assets in the logistics, multifamily, office, and alternatives sectors identified as targets. Geographically, investors cited Japan, South Korea, Australia, Singapore, and China as the top 5 investment destinations.

“Competition for assets will emerge as one of the defining themes for the Asia Pacific commercial real estate market in 2022. Despite the increased volatility in global equity markets, we see continued competition for real estate assets, and scarcity of product is resulting in many investors focusing platform deals and M&A,” says Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL.

Logistics will continue to attract a more significant level of capital this year, with nine in 10 respondents planning to increase their 2022 investments in this sector compared to 2021 levels. Multifamily ranked as the second-most attractive sector after logistics, with seven in 10 investors looking to increase exposure. The office sector remains core for many investors, with six in 10 respondents planning to increase their office sector investments in 2022.

To address expected competition for assets, many investors are re-thinking their strategies and risk tolerance levels. According to JLL, 52% of respondents will have more focus on core-plus strategy and 53% on value-add strategy. By deal type, direct deals (single assets/portfolios) and JVs will continue to be the two most favored methods to deploy capital in 2022. Close to 60% of investors will focus equal or more resources on platform or equity investment deals.

"China continues to rank among the top investment destinations in Asia Pacific, which once again confirms investors’ confidence in this market. Logistics, rental housing, and alternative assets are also the key sectors targeted by investors in China with intensifying competition. Besides, with the support of policy and capital, industries such as life sciences, smart manufacturing, and new generation of information technology (NGIT) are developing rapidly in China, which will draw great attention and attract more capital from investors to business parks.” says, Eric Pang, Head of Capital Markets, JLL China.

JLL surveyed top investment leaders from 37 global and regional investors with a combined assets under management (AUM) of over US$ 2.0 trillion on their investment intentions, strategy, and general outlook in 2022. Most survey respondents identified themselves as real estate and/or private equity managers (74%), representing some of the world’s largest real estate investors and asset managers.

Read more in the Investor Sentiment Barometer here.