Over 8 in 10 investors worried about intensified competition for APAC real estate assets this year

Majority of investors also expect increased capital deployment in the region.

Investor confidence in Asia Pacific real estate remains strong, but heightened competition for assets will emerge as a more considerable challenge for investors in 2022 when deploying capital. According to data and analysis published in JLL’s Investor Sentiment Barometer 2022, 82% of investors identified competition for assets as a significant challenge to their investment strategies in 2022.

The majority of investors, nine in 10 respondents surveyed by JLL, expect increased capital deployment towards Asia Pacific real estate in 2022. The same group of investors also recognized the need to diversify deployment strategies to offset intensifying competition for assets. According to JLL analysis, many investors plan to diversify across sectors and deploy capital, with assets in the logistics, multifamily, office, and alternatives sectors identified as targets. Geographically, investors cited Japan, South Korea, and Australia as the top investment geographies.

“Competition for assets will emerge as one of the defining themes for the Asia Pacific commercial real estate market in 2022. Despite the increased volatility in global equity markets we see continued competition for real estate assets, and scarcity of product is resulting in many investors focusing platform deals and M&A,” says Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL.

Logistics will continue to attract a more significant level of capital this year, with nine in 10 respondents planning to increase their 2022 investments in this sector compared to 2021 levels. Multifamily ranked as the second-most attractive sector after logistics. While opportunities are limited outside of Japan, the survey results indicate a growing investment appetite for multifamily assets, with seven in 10 investors looking to increase exposure. The office sector remains core for many investors, with six in 10 respondents planning to increase their office sector investments in 2022.

To address expected competition for assets, many investors are re-thinking their strategies and risk tolerance levels, according to JLL. The strong performance of real estate in recent years, the competitive investment environment, and the underlying need to deploy capital result in a greater focus on core-plus investment strategies, favoured by 52% of respondents and value-add (53%) strategies. Concurrently, close to 60% of investors will focus equal or more resources on platform or equity investment deals to complement established direct investment strategies.

“Our conviction of overall confidence in the Asia Pacific real estate market is reinforced by the views of the world’s most influential property investors. However, we expect to see this confidence translate into diversification of investment strategies amidst a maturing commercial real estate landscape regionally,” says Roddy Allan, Chief Research Officer, Asia Pacific, JLL.   

JLL surveyed top investment leaders from 37 global and regional investors with a combined assets under management (AUM) of over US$ 2.0 trillion on their investment intentions, strategy, and general outlook in 2022. Most survey respondents identified themselves as real estate and/or private equity managers (74%), representing some of the world’s largest real estate investors and asset managers.