Due to the relatively low interest rate environment, Japan will continue to be the top destination for investors
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According to JLL the the volume of real estate investments in Asia Pacific could fall 5 10-% during 2023. The trend is expected to continue in the same manner that was observed in 2022. It is predicted to show an annual decrease of 25% per year, the company claims.
“Optimism caused by the thought that the pandemic is coming to an end has gradually changed to a cautious outlook amid worries regarding inflation and interest rates as well as geopolitics. Although it is true that the Asia Pacific region is likely to perform better because of greater resilience of consumption, the region is not going to be spared the larger issues,” says Roddy Allan Chief Research Officer, Asia Pacific, JLL.
He also says that this will increase demands on government officials to consider balancing policies of support as uncertainty about the economy continues to plague the country next year.
But one area which is likely to defy the trend is the flow of capital into the real estate industry. JLL expects that these hospitality assets will see an increase of 6% growth in investments for the entire year of 2023. This could prolong the 10-15% annual increase.
The hotel industry benefited from a rise in travel to other countries this year.
In spite of headwinds, JLL states that investors will be focusing on real estate markets that benefit from structural tailwinds as well as higher possible return. These include data centres logistic assets, logistics, and multi-family residential properties.
Office space upgrades will continue to increase the demand for top-quality commercial assets of premium quality. This means that premium office space will be significantly more profitable than the other office market in the key cities of the region’s gateway.
However the demand from e-commerce is driving up demand for top-quality industrial and logistical assets. E-commerce demand is predicted to be a long-term source of warehouse space especially in those countries that have an extended runway.
Developers have already adapted to this demand , and 279 million square feet of brand new inventory is anticipated to go on sale in 2023, according to JLL.
The company believes that Japan will be the top investment option for investors by 2023. It is because of the appeal of the Yen in combination with the country’s low interest rates.
In the meantime, Singapore’s status as an “safe refuge and solid property fundamentals” will continue to draw investors and investors, while Australia’s “highly transparent framework and low beta characteristics are sure attract investors who are primarily core,” says JLL.
“The forecast for 2023 of the real estate market in Asia Pacific’s markets is blemished by uncertainty as the market persists. Although the short-term outlook for real estate seems bleak but it also provides a wealth of potential opportunities” declares Allan. He believes that the economic turmoil in the coming year could prove “relatively quick and thin” and he encourages investors to seize the opportunities that are coming up.