In the first quarter of this year, commercial real estate investments in the Asia-Pacific region increased by 20% compared to a year ago.
According to JLL (Jones Lang LaSalle), a global commercial real estate company, commercial real estate investments in the Asia-Pacific region reached $36.3 billion, marking a 20% increase from the same period last year. Despite the tariff threats, growth has been maintained for six consecutive quarters, with investments rising in all sectors except logistics.
The Korean market grew by 58% compared to the same period last year, with a transaction volume of $6.8 billion, ranking second in the Asia-Pacific region after Japan ($13.7 billion). This is attributed to increased demand for office asset investments due to expectations of lower interest rates and rising rental prices. Additionally, intensified competition for logistics assets led to rising asset prices, while the successful completion of a large single transaction of an office building in Magok-dong, Seoul, by the National Pension Service and the resumption of foreign capital purchases of office assets contributed to market momentum.
Lee Gi-hoon, Deputy Minister of the Capital Market Division at JLL Korea, noted, "The expansion of investment scale in the Korean real estate market is due to expectations of lower interest rates and the stable revenue from core assets, especially in the office and logistics sectors. "
Looking at the major market trends in the Asia-Pacific region, Japan led the region's overseas investments despite rising interest rates, recording $13.7 billion, a 20% increase from the previous year, and establishing the largest transaction volume in the region. This was mainly due to increased transactions of large offices centered in Tokyo and residential portfolio transactions.
Australia and Singapore also showed positive trends with growth rates of 30% and 16%, respectively. Australia recorded $3.9 billion, and investment sentiment improved due to the Central Bank's interest rate cuts, leading to active transactions in the logistics sector. Singapore recorded $2.2 billion, with investors showing a tendency to prefer high-yield assets in an uncertain economic environment.
In contrast, the Chinese market showed a declining trend, recording $3.8 billion, a 33% decrease from the previous year. However, various sector purchases led by domestic insurers and market activities centered on small transactions continued. Hong Kong increased to $1.1 billion, a 49% increase from the previous year, but this is analyzed to be mainly due to the sale of nonperforming assets resulting from high interest rates. India recorded a remarkable growth rate of 219% with $1.3 billion, supported by high interest from domestic and international institutional investors in REITs' office and retail asset purchases and logistics sectors.
By sector, the office sector increased to $16.4 billion, a 31% increase from the previous year, driven by large transactions in Japan and Korea. The logistics sector recorded $5.6 billion, a 28% decrease from the previous year, attributed to concerns about declining demand due to worsened trade outlooks. The retail sector grew by 17% to $6.7 billion, with active transactions centered on Japan and Australia.
The residential sector showed growth centered on Japan, with increasing demand for senior dwellings in anticipation of an aging population. The data center sector saw continued large-scale funding, and there was an expansion of green loans and sustainability-linked finance. In the life sciences sector, demand for dry labs increased due to advances in artificial intelligence (AI) technology.
Stuart Crow, Chief Executive Officer of the Capital Markets Division in the Asia-Pacific region at JLL, stated, "Despite global economic uncertainties, the commercial real estate market in the Asia-Pacific region is maintaining solid growth. Especially, the increase in large transactions in major markets, including Korea, and sector diversification is encouraging," while adding that "close monitoring of external risks such as trade conflicts and changes in monetary policy is required."