Real estate in Australia and Singapore is growing strongly!

According to JLL, the real estate market in Asia recorded more than 34 billion USD in direct investment capital in the first quarter of 2021, down less than 1% compared to the same period in 2020.

However, investment volume decreased by 23% compared to the fourth quarter of 2020 despite the recent strong growth of real estate markets in Australia and Singapore, thereby providing a positive sign for investors.

Most investment activities in the first quarter of 2021 took place in major markets in the region. Transaction volumes in Japan ($11.5 billion), China ($8.3 billion) and Korea ($4.3 billion) accounted for more than 70% of total investment volume during this period.

Stuart Crow, JLL’s Managing Director of Capital Markets in the Asia Pacific region said:“No matter the time, investment volume in the first quarter is usually low as investors are adjusting business strategies and looking for new opportunities. Of course, 2021 is no exception. However, what happened in the fourth quarter of 2020 and current trends give us confidence that investment volume will increase in the near future.”

Investment volume in the first quarter into Australia increased 68% over the same period last year, to 3.2 billion USD. The main driving force for this growth comes from transactions in the city of Sydney. Meanwhile, in Singapore, investment volume even increased by 280% over the same period last year to 2.5 billion USD.

Logistics and office real estate

Logistics assets in the Asia-Pacific region continued to attract investor interest in the first quarter, with volumes increasing 26% compared to the first quarter of 2020 and accounting for 23% of total transactions, JLL said.

In addition, the office segment continues to maintain its leading position in the regional commercial real estate market. This segment attracted 47% of total investments in the first quarter of this year, equivalent to annual growth of 2.5%. In addition, the retail and hotel industry accounts for 22% and the housing market and other sectors account for the remaining 8%.

Regina Lim, head of capital markets research for Asia Pacific at JLL, shared that investment volume in the Asian real estate market will only increase in 2021 due to the attractiveness of the segments in the eyes of investors around the world.

“Current trends will continue to accelerate the capital contribution to sectors such as logistics, thereby bringing many opportunities to the real estate market in the region. We believe investment volumes will increase by 15 to 20% in 2021, driven by structural growth in logistics, data centers and housing, while office investment is likely to recover in line with economic growth momentum.”, Mr. Lim said.

Although nothing is certain, risk awareness surrounding the office segment will bring more opportunities to investors, according to a JLL report.

Office rents in the first quarter of this year in Asia were relatively unchanged. Even so, demand still increased in major markets such as Seoul, Shanghai and Singapore. JLL predicts that demand for flexible space and sustainable, energy-efficient buildings will attract investors aiming for the long term.