The volume of real estate transactions in the Asia Pacific region will likely increase by a slower rate of 5 percent this year as urbanization and demographic fundamentals continue to create opportunities for investors, according to global property consultancy JLL.
"A decade into the economic cycle, investors are contending with macro risks and geopolitical uncertainty such as rising interest rates, continued trade tensions between the US and China, as well as strains in the EU caused by Brexit negotiations," Stuart Crow, head of capital markets of JLL Asia Pacific said. "Against this backdrop, real estate continues to look attractive as a safe haven for investments, with its portfolio diversification benefits and relatively higher returns compared to other asset classes."
Across the region, where the urban population is expected to exceed 400 million by 2027 and the number of people aged 65 and over grow by 146 million in the next decade, strong demographic fundamentals will continue to drive real estate demand, mainly in "living-related" assets, shared workspaces as well as logistics and data centers.
Alternative residential arrangements, including student accommodation, co-living, multi-family, nursing homes and aged care, are set to outperform traditional residential assets given their efficient use of space, superior building management and generally higher entry yields, according to JLL. Aged care, for instance, offers returns of 11 to 14 percent in Tokyo, and 8 to 12 percent in Singapore.
Meanwhile, the region is going to see a rise in flexible offices, including co-working and serviced offices, as businesses are increasingly using shared workspaces as a way to foster innovation among employees and win the war for talent, while a robust rate of consumption will further drive investor interest into data centers and logistics in a region which has been leading the adoption of global e-commerce, JLL said.