Key Takeaways
- • Asia Pacific real estate fundraising contracted 20% in 2020, falling to $26.2 billion from $32.6 billion in 2019, according to the Capital Raising Survey 2021, signaling sustained capital pressure across the region's private real estate funds.
- • Q1 2020 transaction volumes in Asia Pacific commercial real estate declined 26% year-on-year to $34 billion, with Mainland China, Hong Kong, and Singapore experiencing the steepest drops of at least 60% as COVID-19 disrupted deal flow and investor confidence.
- • Retail assets suffered the sharpest contraction with investment volumes down 39% year-on-year due to lockdowns and social distancing measures, while office sector volumes fell 36% despite significant asset sales in China, Japan, and South Korea.
- • South Korea and Japan emerged as relative outperformers with investment activity remaining flat or slightly higher year-on-year, presenting differentiated risk profiles within the broader APAC downturn.
- • Capital markets executives anticipated recovery in H2 2020, noting that well-capitalized investors were positioned to capitalize on market dislocations and emerging deal flow across multiple sectors.
Summary
Asia Pacific real estate fundraising experienced a significant contraction in 2020, with capital raising for private real estate funds targeting the region declining approximately 20% to $26.2 billion, down from $32.6 billion in 2019. This pullback reflected broader macroeconomic headwinds and the disruption caused by the COVID-19 pandemic across investment markets throughout the year.
The first quarter of 2020 bore particularly acute pressure on transaction activity. According to JLL's Global Market Perspective data, Asia Pacific commercial real estate investment volumes fell 26% year-on-year during Q1 2020, contracting to $34 billion. The geographic distribution of this decline was uneven: Mainland China, Hong Kong, and Singapore experienced the most severe impact, with investment activity declining by at least 60% year-on-year. Conversely, South Korea and Japan demonstrated relative resilience, maintaining investment activity levels that were either flat or modestly higher on a year-on-year basis.
The sectoral breakdown revealed differentiated stress across asset classes. Retail assets sustained the heaviest losses, with investment volumes declining 39% year-on-year as lockdowns and mandatory social distancing measures shuttered consumer-facing properties across major markets. Office sector investment volumes fell 36% year-on-year despite substantial large-scale office transactions in Mainland China, Japan, and South Korea, indicating that concentrated mega-deals partially offset broader volume declines.
Stuart Crow, CEO of Capital Markets for Asia Pacific at JLL, acknowledged the anticipated slowdown while projecting recovery dynamics. He noted that many investors had paused activity due to economic uncertainty, and signaled expectations for continued reduced activity through Q2 2020, with stronger rebound anticipated in the second half of the year. Crow emphasized that well-capitalized investors were positioned to exploit market dislocations, suggesting that capital availability rather than overall deal appetite remained the constraining factor for normalized investment levels.
The first quarter of 2020 bore particularly acute pressure on transaction activity. According to JLL's Global Market Perspective data, Asia Pacific commercial real estate investment volumes fell 26% year-on-year during Q1 2020, contracting to $34 billion. The geographic distribution of this decline was uneven: Mainland China, Hong Kong, and Singapore experienced the most severe impact, with investment activity declining by at least 60% year-on-year. Conversely, South Korea and Japan demonstrated relative resilience, maintaining investment activity levels that were either flat or modestly higher on a year-on-year basis.
The sectoral breakdown revealed differentiated stress across asset classes. Retail assets sustained the heaviest losses, with investment volumes declining 39% year-on-year as lockdowns and mandatory social distancing measures shuttered consumer-facing properties across major markets. Office sector investment volumes fell 36% year-on-year despite substantial large-scale office transactions in Mainland China, Japan, and South Korea, indicating that concentrated mega-deals partially offset broader volume declines.
Stuart Crow, CEO of Capital Markets for Asia Pacific at JLL, acknowledged the anticipated slowdown while projecting recovery dynamics. He noted that many investors had paused activity due to economic uncertainty, and signaled expectations for continued reduced activity through Q2 2020, with stronger rebound anticipated in the second half of the year. Crow emphasized that well-capitalized investors were positioned to exploit market dislocations, suggesting that capital availability rather than overall deal appetite remained the constraining factor for normalized investment levels.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.