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According to new data from global real estate consultancy JLL, commercial real estate transaction volumes in Asia Pacific hit a new high in the third quarter of 2019, taking the year-to-date operation to a new high of $128 billion.
According to JLL's most recent Global Capital Flows survey, transaction volumes increased 18% year over year to $42 billion in July-September, marking the best third-quarter output on record. In comparison to 2018, this reflects a 10% rise in volume. The output of Asia Pacific in the first three quarters of the year outperformed the global average transaction volume growth of 1%.
"Asia Pacific investors are looking beyond existing headwinds including slowing growth and trade tensions," says Stuart Crow, CEO of JLL's Asia Pacific Capital Markets. "In markets like Seoul, Tokyo, and Singapore, where occupier fundamentals are solid, liquidity has improved. In the months ahead, we expect Asian investors to diversify their real estate holdings both within the region and globally as they pursue higher yields."
Seoul is the most liquid Asian city, with $15.4 billion in real estate transactions in the first three quarters of the year.
The cities of Shanghai and Singapore stand out.
China, where activity has remained high thanks to a strong start to the year, is driving the rise in transaction volumes in the area. The robust recovery in Singapore, where year-to-date activity is now at an all-time high, has also aided regional development, according to the survey.
Shanghai has earned $14.4 billion in investment so far this year, including $3.5 billion in the third quarter. In the first three quarters of the year, the Chinese city received the most cross-border investments among Asia Pacific cities, followed by Singapore and Sydney. It came in third place globally, behind Paris and London.
Meanwhile, due to high rental growth and net absorption, Singapore's office real estate market was one of the strongest in the world, with volumes increasing by over 175% year on year. The US$1.15 billion acquisition of Duo Tower by Allianz and Gaw Capital in July boosted deal value in the city-state to an all-time high.
Sydney has received many large-scale transactions this year as the third-largest beneficiary of cross-border investment in Asia Pacific. The largest was Blackstone's $1.1 billion purchase of Scentre Group's office portfolio in the second quarter. The majority of foreign investment into Sydney in the third quarter came from Canadian pension funds and Singaporean companies. With $3.5 billion invested by international investors, year-to-date cross-border capital inflows to Sydney are 88 percent higher than the same timeframe last year.
Overseas, Asian buyers have been involved.
In the first nine months of this year, Asia Pacific markets were among the most important capital sources for cross-border acquisitions, with Singapore, South Korea, and Hong Kong all making the top ten list of capital exporters.
"Asian investors are spreading their money more widely and looking at markets like continental Europe, where debt costs are low, assets are plentiful, and markets like Germany and France are seen as winners post-Brexit," Mr. Crow says.
"Asia Pacific's real estate market is likely to remain stable as investors continue to pour money into commercial real estate in search of yield without taking on too much risk."
JLL forecasts a 13% year-on-year increase in commercial real estate investments in Asia Pacific in 2019, with more acceleration expected in the fourth quarter.