Value of 2Q21 transactions in China hit the third highest ever as market rebound
Asia Pacific real estate investments rise 39% year-on-year in first half with value of transactions reaching US$83.5 billion
Shanghai, 11 August 2021 - Investment volumes in Asia Pacific commercial real estate reached US$83.5 billion in the first half of 2021, representing growth of 39% year-on-year. Increased investment into the logistics and industrial, office, and retail sectors indicates an ongoing recovery of the region’s capital markets. Volumes in January to June 2021 were down 6% on pre-Covid-19 levels for the same period of 2019, according to JLL’s (NYSE: JLL) Asia Pacific Capital Tracker.
China, Australia and South Korea comprised 69% of the total investment volume, while activity in Japan was weaker due to disruptions from Covid-19. JLL analysis of capital flows in the second quarter of 2021 reveals that office, logistics and industrial, and retail investments made up 31%, 30% and 30% respectively.
“Asia Pacific real estate investment is clearly back as investors reaffirmed their positive outlook, ensuring a sizable upswing in year-on-year volumes in the first half. We expect further activity in the second half of 2021 as investors to look to portfolio deals, corporate sale and leasebacks, and seek more diversification into sectors like logistics and industrial, life sciences and multifamily,” says Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL.
Logistics and industrial investments surged by 215% year-on-year in the second quarter to US$15 billion, supported by favourable demand dynamics driven by ecommerce expansion regionally, relative yield spreads and investors’ desire to diversify into more resilient asset classes. Major transactions, including the acquisition of the Milestone portfolio by ESR from Blackstone in Australia, were indicative of demand for high quality logistics and industrial assets in the region.
At the same time, office demand improved, reaching US$15.5 billion in investment. Investors were buoyed by Australian CBD office markets, which recorded positive net absorption for the first time since the fourth quarter of 2019, while office rents turned the corner in Singapore and Shanghai.
The Chinese real estate investment market was particularly active, with total transactions reaching RMB 97.4 billion in the second quarter of 2021. The third-highest quarterly investment volume in history and a 123% year-on-year surge indicated that the Chinese market had rebounded significantly.
“Though traditional sectors such as office and retail still accounted for more than half of the total transactions, there was also a new trend in the market," said Eric Pang, Head of Capital Markets, China, JLL, “Some investors exited traditional sectors and made investments into alternative assets, such as data centers and industrial parks. Rental housing will also attract more attention from investors." In addition, JLL also observed that insurers will boost their investment allocations in real estate due to lower fundraising costs.
To download the Asia Pacific Capital Tracker report, please click here.
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