APAC investors exhibit weaker appetite for overseas acquisitions
High-interest rates and anti-pandemic restrictions impact APAC investment in the US.
APAC investors are now more inclined to purchase properties within the region rather than venturing abroad as they exercise careful consideration in overseas acquisitions due to higher interest rates and anti-pandemic restrictions affecting business decisions, particularly in the United States.
According to the CBRE report, there was a substantial US$22.8b worth of cross-border real estate acquisitions within the APAC region in 2022, representing a significant 19% increase compared to the previous year. In contrast, investment outside the APAC region experienced a considerable decline of 40% YoY.
The sharp decline in overseas investment can primarily be attributed to the significant drop in volumes observed in the United States market. CBRE identifies higher hedging costs and currency depreciation as critical hindrances to investment in the United States. These factors have substantially impacted the market, resulting in increased costs for APAC buyers interested in overseas properties.
Moreover, the depreciation of major APAC currencies, including JPY, KRW, AUD, and RMB against the USD over the past two years, not only adds to the expense of property acquisition but also creates additional challenges for institutional buyers seeking to hedge their investments.
The evolving investment landscape in APAC reflects a notable shift in focus among investors, who are now seeking more opportunities within the region. Many investors have turned their attention to three key markets closer to home. Mainland China remains the top investment destination for APAC buyers, closely followed by Singapore and Japan.