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Real Estate Business Review | Tuesday, March 28, 2023
APAC investors are becoming more aware due to rising interest rates and recessionary fears, with net buying intentions softening in 2023, industrial and logistics, and retail properties being the preferred assets.
FREMONT, CA: After a gap of four years, Hong Kong has re-entered the top five list of target cities for cross-border investment, securing the fifth position. Hong Kong has regained its position among the top five investment destinations in the Asia-Pacific region. Tokyo has emerged as the most preferred target market, while Singapore, Ho Chi Minh City, and Sydney follow in order of preference.
Asia-Pacific investors have become more cautious as several economies are raising interest rates to address inflation concerns and recession fears in other parts of the world. As a result in 2023, net buying intention has softened and most investors plan to adopt a wait-and-see approach, anticipating slower yield expansion and additional modest price hikes. Although fundraising activity is still healthy, investors are being more careful.
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Hong Kong’s attractiveness to investors has increased due to the reopening of borders with mainland China and more reasonable valuations of properties. This led to Hong Kong ranking in the top five for cross-border investments in the Asia-Pacific region for the first since 2020.
Due to increasing interest rates and concerns of a recession, investors in Asia-Pacific have shown the lowest intention to buy since 2019. Among the investors in the region, Hong Kong has displayed the weakest buying intentions, despite the rapid pace of local policy rates. Nevertheless, the recent price correction and increase in transactions are likely to boost investment in the Hong Kong market. Investors are preceding with caution due to interest rate hikes, shrinking equity prices, and the potential for an economic recession. Investment activity is expected to increase in the succeeding half of the year as the city continues to show signs of strong recovery. Industrial and logistics as well as retail properties are becoming the preferred assets for investors. In 2023 over 60 per cent of investors anticipated finding discounts in retail and grade-A office properties. Despite logistics being the most popular asset class, only 11 per cent of investors are willing to make offers above the asking price, which is a decrease from 35 per cent in 2022.
From November to December 2022, with over 500 respondents in the region on their buying intentions, perceived challenges and preferred strategies, sectors and markets for the coming year. APAC investors are becoming more careful due to rising interest rates and recessionary fears, with net buying intentions softening in 2023. Industrial and logistics and retail properties are becoming the preferred assets for investors, with more than 60 per cent expecting to find discounts in retail and Grade-A officers in the present year. Regardless of logistics being the most preferred asset class, only 11 per cent of investors are willing to bis above the asking price in 2023, compared to 35 per cent in 2022.
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