In 2020, volumes fell 20% yoy and 4Q20 volumes were flat yoy. Volumes were resilient in China, Japan, Korea and Taiwan, where economic recovery was stronger and there are deep pools of domestic capital. India deals were supported by the REIT sector. Hotels, retail and office transactions were the most impacted, falling over 25% yoy. Multifamily and logistics investments made up nearly 30% of volumes. Investment volume is expected to bounce 15-20% in 2021, due to growth in logistics, data centers, multifamily investments; while office, retail and hotel investments are likely to rebound in tandem with economic growth.
Asia Pacific direct real estate transactions expected to rise 15-20% in 2021. 4Q20 volumes were flat yoy as investment managers returned to the market. In this extended low returns, low interest rate environment, expect further yield compression for high yield, low growth assets. Prime office yields compressed 15-20bps in Singapore, Seoul and Beijing in 2020. Office yields are likely to be stable in 2021. Asset allocation shifts are structural, not cyclical; towards greater diversification, more opportunistic, value-add strategies. Most investors are still under-allocated to logistics and multifamily assets – these will become core part of portfolios. Interest in datacenter, self-storage funds and development assets to grow further in 2021. Office assets still core for most investors, expect more value-add strategies. REITs will continue to de-risk investments in India; SREITs could spend USD 10-12bn offshore in 2021.