Asia Pacific commercial property transactions fell to $26 billion in the third quarter as they tumbled 38 percent year-on-year, with the industrial segment showing resilience and South Korea standing out among key markets for its robust activity during the period. The broader pullback was led by a slide in sales of asset portfolios, which fell 78 percent year-on-year in the quarter to $2.4 billion, a level last seen during the global financial crisis. The global pandemic continues to hamper deal making for a swathe of cross-border investors, and the clouded economic outlook in many markets still presents uncertainty that puts many investors on hold. travel bans and quarantine regimes preventing international investors from following through on many deals, RCA found local institutions gaining the upper hand, with the largest markets proving the most resilient. Domestic players seem to hold the advantage at the moment, and the major markets with robust domestic investor bases — such as South Korea, Japan and China — are holding up better in the current environment.
Commercial property sales in South Korea jumped 22 percent year-on-year in the period to $6.8 billion, including a record $5 billion in office sales. Retail also remained strong, with nine-month investment in the segment surpassing the total for all of 2019. Deal making momentum in South Korea was so strong that a $9.3 billion pipeline of deals had built up by the end of September, about one-third more than in the final quarter of 2019. In mainland China, the region’s next most active market in the third quarter, commercial property sales totalled $5.2 billion, down 36 percent year-on-year. Transactions in APAC’s other big markets tapered off in the period, with Japan’s sales falling 62 percent year-on-year to $4.5 billion and Australia’s sagging 61 percent to $2.9 billion. South Korea appears likely to continue to receive support from its substantial domestic investment base at a time of challenged cross-border investment, an advantage it shares with Japan and China. According to RCA’s analysis, commercial property investors have concentrated over two-thirds of their APAC investment in those three markets this year. Despite its lacklustre third quarter, Japan remained the largest investment market in APAC for commercial property in 2020, with Tokyo the most active metro area this year. China, South Korea, Australia and Hong Kong rounded out the top five.