Low Yields And Liquidity Issues Among Top Concerns Apac Investors
The recent Emerging Trends in Real Estate Global Outlook by PwC and the Urban Land Institute (ULI) revealed some of the top concerns among property investors in the Asia Pacific (Apac) region. This report, published on March 12, highlighted low yields and sluggish transaction volumes as major worries for investors.
Compiled from global asset managers such as Blackstone, Savills Investment Management, and CBRE Investment Management, the report showed that over 70% of survey respondents cited low yields, persistent high interest rates, and geopolitical tensions as their top three concerns.
Further analysis of the survey shows that industry leaders continue to see Asia Pacific as an attractive region for diversification due to its population growth, demographic metrics, and divergent monetary policies, such as Japan’s decision to hike short-term interest rates.
Despite this, real estate transactions in the Apac region only grew by 13% year-on-year to US$173.5 billion ($231.3 billion) last year, trailing behind Europe, Middle East, and Africa’s (EMEA) 12% year-on-year growth and the Americas’ 11% year-on-year growth.
As Europe and North America prepare for a new capital markets cycle with expected increases in transaction volumes, Apac is projected to experience a continued sluggishness in transactions. The decline in transaction volume has also affected liquidity in the region, with China experiencing a 25% decrease year-on-year to US$418.3 billion ($557.6 billion) and Hong Kong SAR seeing a 1% dip in transaction volume to US$15.7 billion ($20.9 billion).
In comparison, investors in Europe face a different set of concerns, with the top three being international political instability (85%), 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 shows that US commercial property prices stabilized last year with only a 0.7% decrease. As a result, investors may shift their focus and capital to these regions in the coming months.
The report also revealed that data center assets were ranked 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 rental rates increasing at a double-digit pace. MSCI’s latest research also identified 2024 as a standout year for this asset class, with acquisitions of existing data centers through single property and portfolio deals increasing by over 60% in the US.
In September 2024, Blackstone and the Canada Pension Plan Investment Board (CPP) acquired data center company AirTrunk from Macquarie Asset Management and the Public Sector Pension Investment Board for over US$16 billion ($21.3 billion). This deal was the largest commercial real estate transaction recorded in Asia Pacific and globally in 2024.
In conclusion, the Emerging Trends in Real Estate Global Outlook highlights the concerns of investors in the Apac region, particularly low yields and sluggish transaction volumes. While there are positive prospects for the region, investors may shift their focus and capital to other regions in the coming months. Additionally, data center assets are predicted to have high investment and development prospects in the coming years.
