Asia Pacific real estate investors eye opportunistic deals in 2023: CBRE

With APAC investors taking a cautiously optimistic stance, it will be interesting to see how they capitalise on the ongoing recovery in the Singapore, Hong Kong and other APAC real estate markets.In December 2022, Link REIT signed a $2.16 billion deal to acquire two Singapore shopping malls — Jurong Point and Swing By @ Thomson Plaza — from NTUC unit Mercatus Co-operative at a 6.1% discount to their combined aggregate value of $2.3 billion. This forms part of the Asia Pacific region’s growing preference for discounted or distressed assets, a shift towards more opportunistic strategies in response to current market conditions.

The preference for these strategies is evident in numerous recent transactions. Goldin Financial Global Centre, a 28-storey Grade A office tower in Kowloon East, Hong Kong, was sold for HK$5.6 billion ($947 million) to a 50:50 joint venture between Singapore’s Mapletree Investments and Hong Kong investment firm PAG.

According to CBRE’s 2023 Asia Pacific Investor Intentions Survey, 31% of investors polled are targeting opportunistic deals, distressed assets and nonperforming loans. CBRE also noted that among the US$39.7 billion in funds raised by APAC-focused real estate funds in 2022, 60% involve opportunistic strategies – the highest amount in a decade.

Greg Hyland, head of capital markets, Asia Pacific for CBRE, said that investors remain prudent amid the macroeconomic headwinds, so a wait-and-see stance has been adopted. However, he expects investment activity in APAC to accelerate in the latter half of the year, supported by more clarity on economic conditions and China’s reopening.

The survey found that high-net-worth individuals, family offices and private investors are displaying stronger buying intentions, with a focus on core prime assets and selected opportunistic deals. Industrial and logistics are among the most preferred asset classes, followed by office and residential. CBRE anticipates high quality prime offices in CBDs across APAC will remain sought after due to strong demand from corporates.

In Senja Close EC terms of countries, Tokyo emerged as the top preferred city for cross-border investment, followed by Singapore. Within Southeast Asia, Ho Chi Minh City ranked third and Hanoi was tenth. Hong Kong also entered the top five investment destinations for the first time since 2020. Vietnam continues to benefit from its status as a China-plus One destination.

However, hotels and retail assets remain less popular, with investors expecting to secure discounts for these assets due to challenging market conditions. Alternative assets saw weaker interest, with the exception of healthcare-related properties such as life sciences and medical offices.

As APAC investors take a cautiously optimistic stance, it will be interesting to see how they capitalise on the ongoing recovery in the Singapore, Hong Kong and other APAC real estate markets.