Source: RE Talk Asia —
Global real estate investors acknowledge they will encounter a fresh set of challenges in 2023, identifying pricing and interest rate uncertainties as the main factors influencing capital deployment into Asia Pacific commercial real estate.
According to global real estate consulting firm JLL’s (NYSE: JLL) Asia Pacific Investor Sentiment Barometer 2023, 78% of investors named pricing uncertainty as the biggest challenge to capital deployment ambitions in 2023, while 70% believe that uneven and unpredictable interest rate policy globally will impact investment decisions. The sentiment marks a shift from early 2022, where 82% of investors polled by JLL named competition for assets their biggest capital deployment challenge. This is compared to 9% in 2023.
Uncertainty on pricing and interest rates will likely result in an ongoing decline in total capital deployed in 2023, but longer-term optimism remains high with investors polled saying central bank policy is prompting a pause rather than a retreat from investment activity. According to JLL analysis, 58% of respondents believe that benchmark rates will first need to adjust down 50-100 bps before investment activity picks up. As a result, approximately 60% of investors polled expect volumes to decline further in 2023 from the low bae of $129 billion deployed into Asia Pacific real estate in 2022, aligning with JLL’s forecast of a modest 5-10% decrease published in its Asia Pacific Outlook 2023.
