JAKARTA (TheInsiderStories) – The value of direct investment in property sector around Asia Pacific reached US$35 billion in third quarter of 2020 or increased by 35 percent compared to last quarter, showed by JLL (NYSE: JLL) report. However the amount fell by 19 percent compared to the same period of last year.
“Uncertainty will remain in the foreseeable future, we believe that the decline in transaction activity has bottomed out and we are optimistic for the quarter. all four will continue to grow,” said Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL in an official statement released this week.
The expansion of investment in the third quarter was driven by increased activity in a number of North Asian markets, especially in China (-10 percent), South Korea (-2 percent) and Japan (-18 percent) compared to 2019. Simultaneously, Tokyo and Seoul emerged as the top two cities in the world for investment in 2020. In annual basis, investment activity in Australia (-45 percent) and Hong Kong (-27 percent) remained weak during the quarter.
In details, during the third quarter, the broader industrial market performed strongly with 76 percent growth in transactions compared to last year, with logistics and data center businesses being the main drivers. Both of them contributed 70 percent and 31 percent to Japanese and Chinese businesses.
Office businesses in Asia Pacific fell 35 percent compared to last year, while retail and hotel businesses fell 51 percent and 87 percent, respectively. Regaining investor confidence during the recovery period supported by the resumption of activity of investment managers in the third quarter. Activities in the first half of 2020 were dominated by private investors as investment managers waited for clarity before investing.
In addition, capital costs have fallen sharply in the last six months, increasing the acquisition power of buyers when they want to take advantage of thin margins. Reduced funding costs by 50 – 100 basis points until September 2020, further encouraging investment managers to return to the market.
“The number of investors who returned was higher in the third quarter, confirming their passion for assets in North Asia as well as logistics-related properties and data centers. We firmly believe that in the fourth quarter there will be broader opportunities across the region, especially in several classes such as multifamily and emerging markets such as Singapore,” adds by Regina Lim, head of capital market research, Asia Pacific.
In the country, said said James Taylor, Head of Research, JLL Indonesia, the logistics sector remains a focus for investors as a sector that continues to show strong performance during the pandemic.
He noted, “Despite the challenges, both local and international developers are likely to remain active in the housing sector while the data center sector continues to attract investors as a developing asset class.”
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