Savills Research January, 2024: Asia Pacific Investment Spotlight
Head to Savills Research and explore the factors that impacted real estate investment trends across the region in 2023 and are likely to persist in 2024.
In its January 2024 Asia Pacific Investment Spotlight, Savills reviews the trends and economic factors that had an impact on property investment in 2023 and examines what might be in store for 2024. Despite high interest rates and geopolitical tensions, APAC remains a preferred investment destination. Favourable demographics, rebounding tourism numbers and potential rate cuts are positioning the region for recovery, if an uneven one.
Challenges of 2023 will Continue into 2024
In 2023, a higher for longer interest rate environment, persistent inflation and geopolitical tensions made investors cautious. As such, investment volumes plunged a staggering 32% y-o-y, to US$128.7 billion. Nonetheless, that decline was less pronounced than either the Untied States or Europe. The biggest drops in APAC came from South Korea, Australia, Vietnam and New Zealand. Those markets saw investment fall off between 48.8% and 64.9%. China, however, continued to dominate volumes, posting US$34.7 billion in 2023, followed by Japan at US$31.9 billion. It is expected that while rates have peaked and inflation is easing, 2024 will present a similar investment environment.
APAC Remains an Attractive Investment Destination
Even with global macroeconomic headwinds causing uncertainty among investors, APAC is an attractive destination for capital. APAC leads the world in projected GDP growth for 2024. The region’s full year forecast is for 3.5%, ahead of 2% in the US and 0.6% in Europe. India, Vietnam and Philippines should record y-o-y growth of approximately 5% in 2024. Japan is expected to post the region’s lowest growth, less than 1%. However, the country’s current low interest rates and positive spreads will make it the ongoing investment favourite. The rise of e-commerce and ageing populations are among fundamental drivers that will support the region.
Defensive Assets Poised to Take Centre Stage
Investment potential for 2024 is coming from outside core asset classes such as offices. Growth sectors such as student living and cold storage logistics will be the focus for the coming year. APAC’s surging e-commerce activity has led to an undersupply of logistics assets in the region. Logistics facilities, data centres and industrial assets will be key investment areas in Vietnam, India, Malaysia, Singapore, Indonesia and South Korea. It will be single area of interest in Taiwan. China will be the regional outlier, and will attract attention in its residential and hotel sectors. Also presenting strong prospects in 2024 are inflation-resistant assets such as multi-family residential, student housing and senior living.
The Coming Year to be Defined by Uncertainty
Recovery will continue at a slow place and the road could be a bumpy one. Uncertainty will cloud real estate markets for most of 2024. The global economy is predicted to slow further, as is China’s, a major driver in APAC. While there is potential for rate cuts, when and by how much remains unclear. Finally, voters are going to the polls in Taiwan, India, South Korea and the US among others. The almost record number of elections around the world could intensify political uncertainties.
For complete details, read the January 2024 Asia Pacific Investment Spotlight at Savills Research: http://sav.li/8s7
