News release

Asia Pacific real estate investment down 17% in second quarter of 2023: JLL

USD 26.8 billion of investments recorded as volumes contract in office, retail and hotels sectors.

August 15, 2023

Yvonne Liu

Public Relations Director, Hong Kong and Macao
+852 28465264

Hong Kong, 15 AUGUST 2023 – Commercial real estate investment activity in Asia Pacific declined by 17% year-on-year in the second quarter of 2023 as investors remained cautious when making capital deployment decisions. According to data and analysis from global real estate consulting firm JLL, investment activity in the region totalled USD 26.8 billion in the second quarter, owing to ongoing uncertainties in the global economy, with resilience in the logistics & industrial and living sectors offset by a sharp contraction in office, retail and hotel sectors.

The decline in investment volumes comes amid shifts in the investment market over the quarter. JLL proprietary data shows that relative to earlier quarters, most second quarter deals were traded at a narrower bid-ask spread, demonstrating sellers' willingness to meet buyers by lowering their asking price. Even with asset repricing putting pressure on total returns, capital value appreciation is still forecast across geographies and sectors, speaking to the strength of rental growth and steady valuations, according to JLL.

Stuart Crow, CEO, Capital Markets, Asia Pacific at JLL, said: "Investment activity in Asia Pacific remained muted in the second quarter as investors weighed the impact of macro uncertainty and fluctuating interest rates into decision making. Despite an expected moderation in investment flows over the quarter, our interactions with clients tell us that sentiment is positive with factors including repricing pressure and a narrowing of bid-ask spreads likely to reinvigorate activity in the medium term."

According to JLL analysis, Japan bucked the downward trend and remained the most active market in the region, recording USD 7.1 billion in investment activity for the second quarter, up 34% year-on-year. Overseas investors were particularly interested in industrial assets, as evidenced by two large portfolio acquisitions made by GIC and Mapletree Logistics Trust, respectively.

In Hong Kong, investment volumes were at USD 0.7 billion over the quarter, plunging 76% year-on-year, comprising of smaller ticket sales as market sentiment softened due to high interest rates. Mainland China’s investment volumes reached USD 4.7 billion in the second quarter, falling 20% year-on-year as its post-pandemic economic recovery lost steam and with institutional investors shifting their focus to alternative sectors.

Oscar Chan, Head of Capital Markets at JLL in Hong Kong, said, "The commercial real estate market in Hong Kong has been affected by the interest rate hikes in the second quarter, and although the interest rate is expected to stabilise gradually, it remains relatively high compared to previous periods, which has impacted investor sentiment. We anticipate uneven performance across the commercial investment sectors in the second half of this year. Retail properties and those with value-added potential area expected to outperform other property sectors.”

South Korea registered USD 5.7 billion in transactions, declining 20% year-on-year as financial market challenges and liquidity issues of domestic pension funds persisted. Australia registered USD 3.1 billion in investment activity, decreasing by 36% year-on-year as the elevated cost of debt and inflation slowed the commercial property investment market. Institutional investors also re-allocated capital towards the industrial and living sectors.

Singapore investments declined 59% to USD 1.5 billion in the second quarter, with a large industrial portfolio deal and a business park trade accounting for the majority of investment volume.

Asia Pacific office volume reached USD 10.2 billion in the second quarter, the lowest since 2011, due to muted investment activity in mainland China, Hong Kong, Singapore and Australia. However, the dip in activity may be short-lived as deal pipelines have been quickly replenished with large scale core offices across the region's key office markets.

In the logistics and industrial sector, investment volumes reached USD 7.7 billion in the second quarter, rising 9.3% year-on-year with Japan, South Korea and China reporting more trades. At the expense of office investments, global and regional funds have snapped up logistics warehouses sited in Korea, Japan and Australia.

Pamela Ambler, Head of Investor Intelligence, Asia Pacific at JLL, said: "In the second half of 2023, markets in the region will likely face varied levels of price uncertainty affected by disparate interest rate outlooks and volatility in the debt market. Looking ahead more broadly, the end of the hike cycle may be delayed for some key economies, which will prolong the divergence in Asia Pacific's lending rates in the near future, but investment activity should be picking up from here."

Learn more in JLL's Q2 2023 Capital Tracker.

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit