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July 26, 2017

The real estate money is on Asia as 2017 reaches its halfway point. Investment activity in Asia Pacific showed the biggest uptick of all three regions, rising 13 percent year-on-year in the first six months; intra-regional investment in the region also registered a significant spike of 48 percent in the second quarter with Asian investors funneling a total of US$49 billion into the region.

“There is an overall trend for higher allocations to real estate around the world, and in the last 12 to 24 months we have seen a greater number of investors looking at the Asia Pacific region,” says David Green-Morgan, Global Capital Markets Research Director with JLL.

While the latest data from JLL shows that there is a great demand for assets throughout the region – especially in the office and industrial sector – China, in particular, saw a surge in foreign investment in the first half of 2017 with major transactions including investors from Hong Kong (Link REIT), Singapore (Keppel Land, CapitaLand) and outside the region (AEW, CPPIB). The biggest retail transaction involved the sale of Metropolitan Plaza in Guangzhou to Hong Kong’s Link REIT for US$592 million.

Industrial strength

From an asset class, the industrial sector has proved a favourite, according to the latest numbers from JLL’s Global Capital Flows report that show the sector registered a 24 percent increase in investment in the first six months of the year, both globally and in the APAC region; the highest growth among all the sectors.

“Investors can’t get enough of the sector thanks to structural shifts in the global economy,” says Green-Morgan. “The rise of automation, e-commerce and third-party logistics have all helped to drive the growth of the industrial sector worldwide.”

Among the biggest investments into the sector took place in India where CPPIB invested US$500 million in a joint venture with IndoSpace to acquire nine industrial and logistics assets while the Xander group acquired the technology special economic zone of Shiram Group in Chennai for US$350 million. Singaporean firm Ascendas-Singbridge Group has also partnered Firstspace Realty respectively to develop more logistics and industrial facilities in India.

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David Green-Morgan

Global Capital Markets Research Director, JLL

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