Real estate investments in Asia-Pacific expected to rebound in 2021

Cushman & Wakefield said it will generate around US$165b.

Investment volumes in real estate in Asia Pacific is expected to further recover this year, global property firm Cushman & Wakefield said, as greater investor confidence is seen in the region

It projected the total real estate investment volumes in the region will bounce back to $1.28t (US$165b) in 2021, which is 90% of its pre-pandemic level. This will be an improvement from the 29% year-on-year decline recorded in 2020.

The recovery is also taking off from the surge in investments during the fourth quarter of 2020, with major investment activities seen in China and South Korea.

"We see growing volumes of international capital chasing China's logistics, business parks and data center assets, given the country's rapid growth in hi-tech and e-commerce industries,” said Francis Li, International Director and Head of Capital Markets, Greater China, Cushman & Wakefield.

“Although relatively high levels of new supply are due in the near-term, we believe in the mid- to long-term growth prospects as the country continues to take the lead in infrastructure development, job creation, and innovation."

Mainland China and Japan are expected to be amongst the first to recover to their pre-pandemic levels; while Hong Kong will continue to face challenges even as Cushman & Wakefield sees investments will increase in the City.

“While Hong Kong saw a similar uptick in H2 2020 and volumes are expected to lift in 2021, they are still likely to remain subdued in comparison to the 2015-19 average of $163b (US$21b),” the report read.

Singapore and Australia may also see investment volume uplift in 2021 after both markets showed renewed activity levels towards the end of 2020. Singapore’s investment volume dropped 73% in 2020, while Australia’s declined 45%.

In light of this, Cushman & Wakefield recommended office properties in China’s Tier 1 cities and rising tech cities as well as logistics centers in Tier 1 and satellite cities for core investments.

“Non-discretionary retail and premium quality shopping centers in Tier 1 and provincial capitals are also wise choices for experienced investors with solid asset management capabilities,” said Catherine Chen, Director and Head of Capital Markets Research, Greater China.

She also recommended taking advantage of underperforming or pre-distressed assets from over-leverage developers and in post-pandemic tourism bounce destinations, like Hong Kong.