Savills Research January, 2024: Asia Pacific Q4/2023 Investment Quarterly
Savills reviews Asia Pacific and 15 major investment markets for Q4/2023.
After a strong start, the rebound expected in 2023 was stalled by persistent higher interest rates and economic uncertainties worldwide. Both factors, as well as looming geopolitical volatility, had an impact on investors. For the year, APAC investment volumes are predicted to fall 23.2% y-o-y, to US$31.8 billion. However, volumes rose over Q3/2023 by 10.2%. Supportive fiscal measures in China helped sentiment improve. Steady domestic tourism recovery led to a boost in Indonesian hospitality. Following multiple regional elections early in the year and normalising monetary policy, activity could increase in the second half of 2024.
India and China Lead the Way in APAC
Supportive fiscal policy and commitment to growth industries have made India and China APAC’s economic engines. Despite challenges, China’s economy is predicted to expand up to 5% in 2024. Investor interest rebounded in Q4, and multifamily residential transactions rose 63.9% y-o-y in a stabilising economy. The expansion of REITs into retail is also expected to attract investors. Transaction volumes in the sector grew 57.2% y-o-y through December 15.
India remained resilient despite global headwinds, with GDP growth over 7% in 2023. Domestic and overseas private equity invested US$3.9 billion in real estate, up 14% y-o-y. Offices remain the preferred asset, accounting for 65% of all investments. Emerging growth drivers have positioned data centres, LSRE and student housing to gain traction next year.
Southeast Asian Markets Defy Trends and Show Resilience
Indonesia and Vietnam were two more of APAC’s most resilient economies last year, as well as active investment destinations. FDI into Indonesia remained on an upward trajectory. It accounted for 63.8% of all investment last year. Logistics remained the prime asset class, however domestic travel and an emerging MICE sector buoyed the hotel market. Occupancy and room rates in business and leisure destinations grew 3% to 5% in Q4/2023.
With GDP forecast to finish at 4.7% for 2023, Viet Nam’s stable FDI and supportive policy underpinned industrial investment last year. Significant industrial investments came from South Korea and China. Additionally, Q4 amendments to housing and real estate laws support the entry of new supply and development.
Japan Logistics and Hospitality Shine Bright for Investors
Overall, Japan remained one of APAC’s most robust mature investment markets in Q4/2023. Loose monetary policy, a weak Yen and strong inbound tourism levels supported it. Sentiment continued to be positive despite flagging office and residential demand. Grade A office rents grew marginally in Q4/2023, by 0.5% q-o-q, while vacancy tightened to 3.2%. The logistics, retail and hospitality sectors, however, sustained investor interest.
China, South Korea, Hong Kong and Singapore Lead Investment Values
High interest rates continue to bear down on investment volumes in APAC. Despite the cost of financing, however, several markets recorded significant transactions. Sales in Beijing, Chengdu, Guangdong and Shanghai put China’s total values at US$2.1 billion to lead APAC. South Korean transaction values in Q4 totalled almost US$1.5 billion, including Samsung SDS Tower in Jamsil, for US$657 million, and Seocho’s Majestar City Tower One for US$406 million. Hong Kong and Singapore posted over US$1 billion in investments during the period. Hong Kong’s year was bolstered by the late sale of 12 floors in One Island East for US$694.1 million.
For complete details, read the Asia Pacific Q4/2023 Investment Quarterly at Savills Research: http://sav.li/7bd
