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

Recent high-value transactions in the Asia Pacific (APAC) real estate market have Tengah Plantation EC shown that asset investors are increasingly adopting an opportunistic approach. Deals such as Hong Kong-listed Link REIT’s purchase of two Singapore shopping malls in December 2022 and the sale of the Goldin Financial Global Centre (GFGC) to a 50:50 joint venture by Singapore’s Mapletree Investments and Hong Kong investment firm PAG earlier this month are just a few examples of this shift in investment strategies.

Recent market conditions have made more opportunistic strategies more attractive, with the rising cost of finance and mild yield expansion diminishing the appeal of core strategies, according to property consultancy CBRE’s 2023 Asia Pacific Investor Intentions Survey. The survey, which polled a variety of APAC institutional investors, revealed that 31% are targeting opportunistic deals, distressed assets and nonperforming loans; up from 26% the previous year.

Despite economic headwinds, most (93%) of the surveyed APAC institutional investors expect their allocations to real estate to increase or remain stable in 2023. High-net-worth individuals, family offices and private investors have also expressed strong buying intentions, with a focus on core prime assets and selected opportunistic deals. As prime offices remain top of the list for investors, industrial and logistics and residential are also increasingly sought after.

CBRE adds that hotels and retail assets are feeling the effects of challenging market conditions and have seen weaker investor interest. Consequently, conservative pricing expectations have been applied to retail assets, while alternative assets such as healthcare-related properties proving more popular than data centres.

In terms of investment destinations, Tokyo and Singapore ranked at the top, with Vietnam’s Ho Chi Minh City and Hanoi also within the top 10. Hong Kong has also become attractive to investors as it reopens its border with mainland China and presents more reasonable valuations.

Overall, the survey’s results paint a picture of a market that has become more cautious amid current macroeconomic uncertainties and is waiting for more favourable conditions for investment to return. However, CBRE’s Greg Hyland and Henry Chin remain upbeat on the prospect of increased investment activity in the latter half of 2023.