According to the Emerging Trends in Real Estate Global Outlook by PwC and the Urban Land Institute (ULI), low yields and slow transaction volumes were among the top concerns for property investors in Asia Pacific (Apac) this year. The report, published on March 12, gathers investor sentiment from global asset managers including Blackstone, Savills Investment Management, and CBRE Investment Management. Over 70% of respondents cited low yields, high interest rates, and geopolitical tensions as the main concerns for investors.
The report notes that Asia Pacific continues to be an attractive diversification strategy for industry leaders due to its population growth and demographic metrics, as well as its divergent monetary policies, such as Japan’s plans to increase short-term interest rates. Last year, real estate transactions in the region grew by 13% year-on-year to reach US$173.5 billion (S$231.3 billion), surpassing Europe’s 12% growth and the Americas’ 11% growth.
However, as Europe and North America prepare for a new capital markets cycle with further increases in transaction volumes expected, transaction volumes in Apac are predicted to remain sluggish. Liquidity in the region was impacted last year by a decline in transaction volume. In China, transactions decreased by 25% year-on-year to US$418.3 billion (S$557.6 billion), while Hong Kong SAR saw a 1% decline to US$15.7 billion (S$20.9 billion) in transaction volume.
Meanwhile, investors in Europe have different concerns. The top three areas of concern for asset managers in the region were international political instability (85%), further escalation of the war in the region (83%), and Europe’s economic growth (77%). Data from leading US-based research and data analytics company, MSCI, also reveals that US commercial property prices stabilized last year, experiencing only a 0.7% decline. As a result, investors may shift their focus and capital towards these regions in the upcoming months.
The report also showed that data center assets scored the highest for investment and development prospects in all three regions in 2025. According to New York-based research firm Green Street, there was a record-high demand for data centers globally last year, with rental prices growing at a double-digit pace. In its latest research, MSCI predicts that 2024 will be a standout year for this asset class, with acquisitions of existing data centres through single property and portfolio deals increasing by more than 60% in the US. In September, Blackstone and the Canada Pension Plan Investment Board (CPP) acquired data center company AirTrunk from Macquarie Asset Management and the Public Sector Pension Investment Board for over US$16 billion (S$21.3 billion). This was the largest commercial real estate deal recorded in Asia Pacific and globally in 2024. [end]