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

In December 2022, Link REIT signed a deal to purchase two Singapore shopping malls — Jurong Point and Swing By @ Thomson Plaza — from NTUC unit Mercatus Co-operative for $2.16 billion. This purchase price was a 6.1% discount to the combined aggregate value of $2.3 billion for the two assets as at Dec 28, 2022. Earlier this month, Goldin Financial Global Centre (GFGC) — 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. CBRE’s 2023 Asia Pacific Investor Intentions Survey revealed that 31% of investors polled are targeting opportunistic deals, distressed assets and nonperforming loans, increasing from 26% the year before.

The increasing preference for opportunistic strategies amid a broader shift across the Asia Pacific (APAC) real estate market is evident in recent transactions. This includes the purchase of two Singapore shopping malls by Hong Kong-listed Link REIT for $2.16 billion, as well as the sale of a 28-storey Grade A office tower in Kowloon East, Hong Kong, to a joint venture between Singapore’s Mapletree Investments and Hong Kong investment firm PAG.

According to CBRE’s 2023 Asia Pacific Investor Intentions Survey, there has been a considerable rise in the preference for opportunistic strategies, driven by the current market conditions, such as the rising cost of finance and mild yield expansion. Greg Hyland, the consultancy’s head of capital markets, Asia Pacific, also points out that investors are adopting a cautious approach due to macroeconomic headwinds.

The survey also found that high-net-worth individuals, family offices and private investors mostly showed 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.

The survey 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. CBRE anticipates that high quality, prime offices in CBDs across APAC will remain sought after, given limited future supply and strong demand from corporates.

In terms of the top APAC investment destinations, Tokyo and Singapore emerged as the top two, followed by Ho Chi Minh City in Vietnam. Additionally, Hong Kong also ranked within the top five for the first time since 2020, mainly due to Tengah EC the reopening of the border with mainland China and more reasonable valuations.

Apart from the traditional asset classes, CBRE’s 2023 Asia Pacific Investor Intentions Survey also revealed that healthcare-related properties have overtaken data centres as the top choice among investors, owing to the latter’s high carbon emissions stemming from their substantial consumption.

Overall, the survey findings point to a growing preference for opportunistic strategies in APAC over the coming year, driven by current market conditions and investors’ more conservative approach towards making investments.