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The Fed moved on its widely anticipated 0.25 percentage point rate hike during the month, the first increase since December 2018, signaling the start of an incremental salvo to address spiraling inflation. However, with the move largely priced in, stocks in the region remained focused on the fallout from the conflict in Ukraine, which has exacerbated inflationary pressures through rising energy and commodity prices, as well as conditions nearer home. Signs of a resurgence in the pandemic across a number of major Chinese cities and the resultant lockdowns also depressed markets. While sentiment was lifted after China tried to shore up private sector confidence after a protracted regulatory crackdown, indicating support for its real estate and internet industries, the region’s equities remained on a down trend as it slumped to its third consecutive month of losses. MSCI’s total return benchmark for the region’s equities fell close to 6% in the first quarter to underperform the region’s property sector.

Demand for office and industrial assets supports growth across key Asia Pacific markets

HONG KONG, 27 April 2022 – Leading diversified professional services and investment management firm Colliers (NASDAQ and TSX: CIGI) has today released its Asia Pacific Market Snapshot Q1 2022 report, which highlights how major Asia Pacific real estate markets continue to build on a recovery led by gains in the office and industrial segments and are looking forward to a pick-up in dealmaking across segments in the upcoming quarters.

In Australia, easing restrictions brought a return to work and travel, spurring deals worth over USD1 billion in Sydney and Melbourne’s office markets. China too saw demand surge for office space, including in business parks, with key cities witnessing the finalisation of deals worth a combined RMB11 billion (USD1.7 billion). In India, the residential market saw sales surpass pre-2020 levels while strong economic fundamentals triggered an influx of foreign capital. In Singapore, policy measures intended to cool the residential market spurred investments in commercial properties. Japan saw active investment led by REITs across multiple segments, including large office and logistics properties as well as industrial and hotel assets. The report, which examines the previous quarter’s performance of property markets in 16 Asia Pacific countries and territories, also provides forecasts for the current and upcoming quarters.

 
A megatrend that emerged from the last decade and continues to gain momentum is the pivot by investors to non-traditional forms of real estate. The onset of the pandemic has notably accelerated the focus on new economy assets, including those that provide vital infrastructure to the digital economy, such as data centers and logistics. Another powerful trend is the move towards ESG initiatives.

APREA took the opportunity to convene a panel of experts during the association’s annual Asia Pacific Market Outlook 2022 conference to explore how investors are leveraging on these shifts in their investments.

By Hiroshi Torii
Senior Analyst, Equity Research/REITs
SMBC Nikko Securities Inc.

10 Sep 2021 is the 20th anniversary of the creation of the J-REIT market, which was born on 10 Sep 2001 with the TSE listing of Nippon Building Fund (8951, NBF) and Japan Real Estate (8952, JRE). Amid changing externals, the J-REIT market has passed through periods of stability, frenetic activity, and sluggishness, and has steadily grown in size while working to improve unresolved market issues. Total J-REIT market cap was just Y250bn (acquisition value Y320bn) at end-September 2001, but expanded to Y17.6tn (Y20.9tn) by end-August 2021.

Though the market has good and bad years in terms of performance, income gains (dividends) have built up steadily and the total return (incl dividends) over the 20 years from 10 Sep 2001 to end-August 2021 was +416%, much higher than the +166% for TOPIX. We think the size of J-REIT income gains (incl compound interest) deserves another look.

J-REITs play a crucial role as buyers of domestic real estate. The growth of the J-REIT market has not only revitalized the Japanese real estate market, but has also helped significantly improve market transparency by enhancing disclosure around property transactions and earnings. This has expanded the opportunities for a wide range of investors to access the total returns generated by J-REITs. We look for continued improvement of unresolved issues to unlock further market growth and higher profile.

In this report, we review various aspects of the J-REIT market over the past 20 years. We also look at the 20 biggest events impacting the J-REIT market over the past two decades, and rank the J-REITs based on their performance on several key metrics over the past 20 years. We also highlight issues that the J-REIT market needs to address in the next 10 years.