Commercial real estate investment in Asia Pacific rose 82% year-on-year (YoY) in Q3 2024 to US$38.8 billion, registering the highest quarterly investment volume in Asia Pacific since the 2022 rate-hike cycle began, and the fourth consecutive quarter of YoY growth for the region. According to data and analysis by global real estate consulting firm JLL (NYSE: JLL), 2024 year-to-date (YTD) investment volumes totalled US$96.3 billion, an 28% increase from the same period a year ago.

All major property sectors, except living, recorded volume growth, marked by strong cross-border investment volumes totalling US$14.5 billion YTD, a 6% YoY increase from this time last year. This surge in cross-border investment was underpinned by strong interest in office and logistics assets from overseas investors.

Korea became the most active market in Asia Pacific with the return of mega office deals. Japan recorded US$8.4 billion in Q3 trades, fuelled by large hotel portfolio acquisitions riding off the back of record tourist arrival numbers. Singapore also outperformed, posting US$4.4 billion in Q3 trades, a 118% increase from Q3 2023, attributed to strong demand for industrial, retail and life sciences assets from institutional investors.

“Many factors came together in the third quarter to ensure that Asia Pacific transaction volumes surged, a theme we believe will only gain momentum with the expected easing of borrowing costs in major regional markets,” said Stuart Crow, CEO, Asia Pacific Capital Markets, JLL. “Coupled with bottoming out real estate valuations, we expect 2025 to be a strong vintage for market entry, with early movers likely to face less competition from other investors.”

Across Asia Pacific, the office and logistics sectors accounted for more than half of investment volumes. For the office sector, Seoul and Tokyo are the standout performers with their sound office fundamentals. Rental growth continues to exceed the rate of inflation in Seoul due to strong demand, with no grade-A office supply in the pipeline in 2025. In Tokyo, Grade-A office vacancy hovers near 3% and rents recorded the third quarter of consecutive growth in Q3. The logistics sector was buoyed by large portfolio transactions, with both domestic and overseas investors bullish about Japan logistics due to favourable rental prospects. Logistics volumes in Australia also rebounded, particularly in gateway markets Sydney and Melbourne.

There has also been an emergence of major infrastructure investments overlapping with commercial real estate alternatives such as data centres, capitalising on the global momentum of digital infrastructure, renewables, and energy security. Asia Pacific-focused infrastructure fundraising had a strong showing in H1 2024, recording US$13.2 billion. With Asia Pacific leading the renewable energy supply surge, accounting for 70% of new renewable electricity capacity globally in 2023, more funds are expected to be committed and deployed in infrastructure.

“As inflation across the region begins to moderate and the Fed moves to loosen monetary policy, Asia Pacific’s central banks also begin its rate reduction cycle. Property yields could follow a similar trend, but long-term interest rates are expected to stay higher than what we’ve seen over the last decade,” said Pamela Ambler, Head of Investor Intelligence, Asia Pacific, JLL. “Asia Pacific is making strides in transparency, with the region seeing the strongest average improvements in data since 2022. Transparency encourages higher investment, and we look forward to seeing this shape investor appetite in the region.”

Download JLL’s Asia Pacific Capital Tracker Q3 2024 here.

For further information, please contact Stuart Crow, CEO, Asia Pacific Capital Markets, JLL and Pamela Ambler, Head of Investor Intelligence, Asia Pacific, JLL as the details below.