APAC property investments fall 29% in Q3 2022

According to recent research, the number of real estate investments in Asia Pacific (APAC) decreased in the third quarter of 2202. Direct real estate investments totalled US$28 billion ($40 billion) during the quarter, a year on year decrease of 29%.

According to the study, the decline in investment volume is the result of “a variety of macroeconomic factors,” such as less trading on important markets, the appreciation of Apac currencies against the US dollar, and the relentless raising of US interest rates.

Singapore’s investment volume for the third quarter of 2022 was US$2.3 billion, down from US$3.6 billion in the second quarter. The reduction is the outcome of prolonged talks on significant office purchases as a result of widening price differences between buyers and sellers. However, the volume shows an improvement of 116 percent year over year after starting from a low base in Q3 2021.

In contrast, investment volume in Japan fell by 61 percent year over year to US$4.6 billion in the third quarter of 2022. As a result of the residual effects of Covid-zero regulations, Hong Kong’s investment volume fell by 75% year over year to US$720 million, while China saw a fall of 55% to US$3.3 billion.

Additionally, Australia, which recorded real estate investment of US$7.3 billion, saw continued healthy investment activity. Office sales in Sydney and Melbourne were the main contributors to the 15% year-over-year increase. South Korea also showed some resiliency, with deals totalling US$6.4 billion but down by 8% year over year. Office transactions in APAC moderated to US$14.4 billion, a year on year fall of 33%, according to sectors. This is the result of “sluggish” volumes in China and Japan as well as a softened attitude amid a widening price difference between buyers and sellers.

Volumes for logistics and industrial transactions fell by 52 percent year over year to US$4.6 billion, driven by price adjustments brought on by rate increases and increased debt costs. In Q3 2022, retail investment was equally subdued, falling 13% year over year to US$4.5 billion.

The region’s best-performing industry was the hotel industry, which saw transaction volumes rise by 16 percent year over year to US$8.4 billion, helped by the relaxation of social and travel restrictions. In the fourth quarter, experts predict that investors will put off making judgments about their portfolios as they wait for more market clarity over the state of the economy.“In the interim, we expect the level of re-pricing to sharpen and the price discovery phase to extend throughout next year,” she adds.

To that end, analysts anticipate a 12 to 15% decrease in APAC investment activity between H2 2022 and H1 2022. It anticipates a 25% year over year decline in transaction volumes for the entire year.