2023 could see cautious investors and a 5–10% decline in investment volume

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According to JLL JLL, property investment volume 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 anticipated to see an annual decrease of 25% year-over-year, the firm claims.

“Optimism caused by the thought of the pandemic coming an end has gradually been replaced by caution in the face of worries regarding inflation and interest rates as well as geopolitics. Although there is a good chance that the Asia Pacific region is likely to perform better because of stronger consumption, the region is not going to be immune to the wider problems,” says Roddy Allan Chief Research Officer, Asia Pacific, JLL.

He also says that this will increase demands on government officials to find a balance the support measures as uncertainty in the economy continues to plague the country next year.

But one area which is predicted to break the trend is the flow of capital towards the hotels real estate market. JLL expects that these hospitality assets will see an increase of 6% annual increase in investment over the course of 2023. This could increase the 10-15% annual increase.

The hotel industry benefited from an increase in travel to other countries this year.

In spite of headwinds, JLL declares that investors will be focusing on real estate markets that benefit from structural tailwinds as well as higher possible return. These include data centers as well as logistics assets and multi-family residential properties.

Office space upgrades will continue to increase the demand for top-quality commercial assets that are of the highest quality. This means that top-quality office space will be significantly more profitable than the other office market in major cities of the region’s gateway.

However the demand from e-commerce is driving up the demand for high-quality industrial and logistics assets. E-commerce demand is predicted to be a long-term factor in the demand for warehouse space, especially in those countries that have an extended runway.

Developers have already adapted to the demand, and 279 million square feet of brand new inventory is anticipated to go on sale in 2023, JLL says.

The firm believes that Japan will continue to be the most desirable investment option for investors by 2023. It is because of the appeal of the Yen and 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 as will 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 dim as uncertainty persists. While the outlook for the near term for real estate is uncertain but it also provides a wealth of potential opportunities” declares Allan. He believes that the economic turmoil this year could be “relatively quick and thin” and he encourages investors to make the most of potential opportunities in the future.