4 bright spots for investors in 2023

Investors are increasingly cautious as global growth slows, with the focus shifting to real estate sectors most likely to weather any bumps in the economy.

Real estate investment volumes in Asia are forecast to shrink up to 10% in 2023, according to JLL’s Asia Pacific Outlook 2023.

However, any disruptions to the economy are expected to be short-lived, says Roddy Allan, Chief Research Officer, Asia Pacific, JLL.

“Market participants should be thinking beyond this period to take advantage of opportunities that lie ahead,” he says.

Here are the top sectors where investors think will do better than others this year.

Japan multifamily

One of the popular sectors winning investors’ favour is Japan’s multifamily sector, buoyed by a weakening yen and ultra-low interest rates.

Recent deals highlight continued confidence in the Japanese market.

U.S. developer Hines acquired 11 multifamily properties last month as part of its plans to reach US$1 billion in assets in Japan within three to five years. Two months prior, Singaporean real estate investment firm TE Capital Partners sealed a US$100 million acquisition of 16 rental residential properties in Tokyo.

“With yield spreads still attractive and with investors expected to dispose of large portfolios in Japan, more investment opportunities could yet emerge in the year ahead,” says Sungmin Park, Director, Asia Pacific Capital Markets Research, JLL.

Australia logistics

Tight supply and demand dynamics for Australia’s logistics sector continue to underpin a solid outlook, similar to the wider region where rents rose 6.5% year-on-year in the third quarter last year, according to JLL data.

“Despite rising vacancy pressures, demand remains strong, and vacancy remains below the long-term average across mature markets,” says Guevarra.

These market conditions make Australian cities favourites to emerge as the top rental growth performers in 2023, he says.

“The fundamental undersupply of prime space in core locations, such as in Sydney and Melbourne, and rental reviews by landlords who are factoring in inflationary pressures, are expected to put upward pressure on logistics rents across the country.”