APAC shatters more records with Q1 real estate investment

After a record-breaking fourth quarter 2017, commercial real estate investment in Asia Pacific hit yet another high in the first three months of 2018.

January 01, 2021

HO CHI MINH, 1 MAY 2018 – After a record-breaking fourth quarter 2017, commercial real estate investment in Asia Pacific hit yet another high in the first three months of 2018.

Investment in the region hit US$40 billion, 22 percent higher than the previous record set in 2008 and up 34 percent on the first quarter of 2017.

The unprecedented activity was driven by strong demand in the region's core markets of Japan, India, Hong Kong, Australia and China. India saw its second strongest quarter ever, surpassing US$1.6 billion, as offshore investors look to gain exposure to the rapidly growing economy of the Southeast Asian powerhouse.

The region also benefitted from the most traded city in the first three months of the year. Tokyo surpassed London to take the global crown with US$9.1 billion of investment in Q1 as investors almost exclusively targeted the city's office sector.

Despite growing trade tensions and elevated stock market volatility, investors are still seeking value in real estate.Global real estate investment in the first quarter of 2018 came in at US$165 billion, 15 percent higher relative to the same period last year, and hitting the highest Q1 level in 10 years.

While fundamentals in many markets remain strong, JLL's Pranav Sethuraman expects investment to soften by 5 to 10 percent, to around US$650 billion, as "investors pursue real estate through new avenues outside of traditional single-asset acquisitions."

'The growing prominence of debt financing, M&A activity, and alternative sectors all demonstrate that while the way investors access the sector may be shifting, their appetite for real estate has not diminished," he explained.

Americas: U.S. starts 2018 on a strong footing, leads regional growth

After four consecutive quarters of declines, the Americas started 2018 on a high with investment activity rising by 18% to US$68.8 billion. The U.S. led the activity with volumes increasing 23% to US$62.8 billion. Elsewhere, Brazil surpassed the US$1 billion mark for the third successive quarter, despite ongoing political volatility while investment activity in Canada remains notably higher than the historic first quarter average.

EMEA: Core markets drive growth

Transaction levels in Europe hit US$56.3 billion, mirroring the start of 2017 but still 18% higher than the first quarter average. Leading the way are the region's two largest markets, the UK and Germany, where volumes are up by 10% and 13% y-o-y respectively. Investors continue to seek exposure to the London market, shrugging off Brexit concerns while in Germany, investors are drawn to strong economic and employment growth. Denmark (3%), Switzerland (74%) and Portugal (138%) all recorded growth, balanced by declines in France (-3%), Italy (-3%), Spain (-30%) and Sweden (-53%). Investment in Poland surpassed the US$2 billion mark as investors look to take advantage of a rapidly developing market.

Asia Pacific: Asia Pacific continues to shatter records

Underpinning the record-breaking quarter was strong performances in the region's biggest markets with Japan (23%), Hong Kong (72%), Australia (87%) and China (93%), and India (3453%) all recording growth. South Korea (-18%) and Singapore (-39%) were the biggest markets in the region to see declines. In Japan, strong office leasing demand has led to reduced vacancy rates and higher rents. While, after a relatively quiet 2017, J-REITs returned to the market with over US$2.2 billion in acquisitions, a 62 percent increase from the first quarter of 2017.

The Vietnam Real Estate market attracted USD455 million between January and April, accounting for 12.8% of the country's total FDI capital during the period.

USD3.05 billion in FDI was committed during the same period last year to real estate by foreign investors, accounting for 8.5% of Vietnam's total registered FDI capital, the Ministry of Planning and Investment reported. According to Commercial Real Estate (CRE) Services, investment in the real estate focused on the southern market. However, since 2017, foreign investors are focusing their attention on Hanoi's property market for example, Sumitomo Group's deal on the northern side of the Red River.

The General Statistics Office reported that Vietnam lured 883 new FDI projects totalling USD8.06 billion in the first four months of this year, down 23.9% on-year. However, FDI disbursement was estimated at USD5.1 billion during the four-month period, up 6.3%.  South Korea was the top foreign investor in Vietnam between January and April, followed by Japan.

Stephen Wyatt, Country Head in Vietnam of JLL commented "Vietnam continues to attract significant interest from Foreign Investors in all sectors of the property market, our biggest challenge is finding good quality opportunities. The JLL Capital markets team sees 5-10 foreign investors a week and whilst the economy continues at this pace, we expect to see another bumper year for foreign investment in Vietnam in 2018.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 91,000 as of March 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.

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