Increase in investor’s activity are driven by domestic investors in Malaysia, Tan said.

PETALING JAYA: Commercial real estate investment in Asia Pacific rose 28% year-on-year (YoY) in Q3 2024 to US$38.8bil (RM173.96bil), the highest quarterly investment volume in the region since a series of the United States’ rate-hike started in March 2022 and ended with rate-cut in September and November this year, according to global real estate consulting firm JLL. 

Japan remains Asia Pacific’s most active market, recording USD8.4 bil (RM37.66 bil) in Q3 trades, fuelled by large hotel portfolio acquisitions riding off the back of record tourist arrival numbers. Singapore also outperformed, posting USD4.4 bil (RM19.72bil) in Q3 trades, a 118% increase from Q3 2023, attributed to strong demand for industrial and retail assets from institutional investors.

“Many factors came together in the third quarter to ensure that Asia Pacific transaction volumes surged, a theme we believe will only gain momentum with the expected easing of borrowing costs in major regional markets,” said JLL Asia Pacific Capital Markets chief executive officer Stuart Crow.

Across Asia Pacific, the office and logistics sectors accounted for more than half of investment volumes. For the office sector, Seoul and Tokyo are the standout performers with their sound office fundamentals. Rental growth continues to exceed the rate of inflation in Seoul due to strong demand, with no grade-A office supply in the pipeline in 2025. In Tokyo, Grade-A office vacancy hovers near -3% and rents recorded the third quarter of consecutive growth in Q3. 

The logistics sector was buoyed by large portfolio transactions, with both domestic and overseas investors bullish about Japan’s logistics due to favourable rental prospects. Logistics volumes in Australia also rebounded, particularly in gateway markets Sydney and Melbourne.

JLL Malaysia managing director Jamie Tan said the increase in investor activity is driven by domestic investors. 

“In Malaysia, JLL observes a notable increase in investor activity, which is still predominantly driven by domestic investors. It is important to note that JLL tracks only the largest transactions (over RM500,000) and we focus on investment transactions: either standing assets being traded between investors or land sold for development. This highlights their confidence in the local market,” Tan said.  

During the first three quarters of this year, the volume of investment transactions tracked by JLL has nearly matched the total for all of 2023. It is important to note the growing share of investments in existing assets, primarily shopping malls and other retail properties. Its share of overall transaction volumes this year stands at 40%. 

The second most active sector is prime logistics and industrial, where growing market maturity and size not only instils more confidence in investors but also provides opportunities to invest in existing assets. 

“We also note a slight compression of yields in the prime logistics and industrial segment, signalling that investors view this sector with higher confidence and perceive the associated risks as decreasing,” Tan added. 

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