According to the 2021 Emerging Trends in Real Estate Global Outlook by PwC and the Urban Land Institute (ULI), published on March 12, property investors in the Asia Pacific (Apac) region are concerned about low yields and “sluggish” transaction volumes.
The report gathers investor sentiment from global asset managers, including US-based Blackstone, UK-based Savills Investment Management, and CBRE Investment Management. Over 70% of survey respondents identified low yields, persistently high interest rates, and geopolitical tensions as the top three concerns among investors.
The report notes that industry leaders continue to view Asia Pacific as an attractive diversification strategy due to its population growth, demographic metrics, and divergent monetary policies, such as Japan’s commitment to raising short-term interest rates. Last year, real estate transactions in the region grew by 13% year-on-year to US$173.5 billion ($231.3 billion), surpassing Europe’s 12% growth and the Middle East and Africa’s (EMEA) 11% growth.
However, as Europe and North America look to stimulate a new capital markets cycle with volumes expected to increase further in both regions, transaction volumes in Apac are expected to remain sluggish. Liquidity in Asia Pacific was affected last year by a decline in transaction volume. In China, transactions fell by 25% year-on-year to US$418.3 billion ($557.6 billion), while Hong Kong SAR saw transaction volumes drop by 1% year-on-year to US$15.7 billion ($20.9 billion).
Meanwhile, investors are grappling with different concerns in Europe. The top three prevailing areas of concern for the region among asset managers were international political instability (85%), a further escalation of the war in the region (83%), and Europe’s economic growth (77%).
Data from MSCI, a leading US-based research and data analytics company, also show that US commercial property prices stabilized last year, ending the year down just 0.7%. As a result, investors may turn their attention and capital to these regions in the coming months.
The report also revealed that data center assets scored highest for investment and development prospects across all three regions in 2025. According to New York-based research firm Green Street, global demand for data centers reached record levels last year, with asking rents growing at a double-digit rate. In its latest research, MSCI also expects 2024 to be a standout year for this asset class, with acquisitions of existing data centers through single property and portfolio deals increasing by more than 60% in the US.
Last September, Blackstone and the Canada Pension Plan Investment Board (CPP) acquired data center firm AirTrunk from Macquarie Asset Management and the Public Sector Pension Investment Board for over US$16 billion ($21.3 billion). This was the largest commercial real estate deal ever recorded in Asia Pacific and globally for 2024.