Low Yields And Liquidity Issues Among Top Concerns Apac Investors
By PwC and the Urban Land Institute (ULI) March 12, the Asia Pacific (Apac) region’s low yields and sluggish transaction volumes were among the top concerns for investors, according to the 2025 Emerging Trends in Real Estate Global Outlook.The report combines investor sentiment from top global asset management firms, including Blackstone from the US, Savills Investment Management from the UK, and CBRE Investment Management.Over 70% of survey respondents identified low yields, persistently high interest rates, and geopolitical tensions as the primary concerns for investors.AdvertisementAccording to the Emerging Trends in Real Estate Asia Pacific 2025 survey, the report states that industry leaders continue to be drawn to the Asia Pacific region as a diversification strategy due to its population growth and other demographic metrics, as well as its divergent monetary policies, such as Japan’s intention to increase short-term interest rates.Last year, real estate transactions in the region grew by 13% year-on-year to US$173.5 billion ($231.3 billion), surpassing the growth of Europe, Middle East, and Africa (EMEA) by 12% year-on-year and the Americas by 11% year-on-year.AdvertisementAdvertisementHowever, as Europe and North America seek to initiate a new capital markets cycle, with volumes set to continue to improve in both regions, transaction volumes in Apac are expected to remain moderate.In Asia Pacific, last year’s liquidity was affected by a decrease in transaction volume. Transactions in China fell by 25% year-on-year to US$418.3 billion ($557.6 billion), while Hong Kong SAR saw transaction volumes fall by 1% year-on-year to US$15.7 billion ($20.9 billion).Meanwhile, investors in Europe are dealing with a completely different set of concerns. International political instability (85%), a further escalation of the war in the region (83%), and Europe’s economic growth (77%) were their top three concerns, according to a survey of asset managers in the region.The results of the Emerging Trends in Real Estate Europe 2025 survey can be found at www.msci.com. The research and data analytics company, based in New York, also reported that US commercial property prices remained steady last year, ending the year down just 0.7%. Therefore, investors may be more interested in these regions in the following months.AdvertisementAdvertisementThe survey also revealed that data center assets had the most promising investment and development potential across all three regions in 2025.Last year, the global demand for data centers reached record highs, with rental rates increasing at a double-digit pace, according to New York-based research firm Green Street’s latest research. MSCI also identifies 2024 as a standout year for this asset class, with purchases of existing data centers through portfolio and single-property deals up more than 60% in the United States.Last September, Blackstone and the Canada Pension Plan Investment Board (CPP) paid over US$16 billion ($21.3 billion) to purchase data center company AirTrunk from Macquarie Asset Management and the Public Sector Pension Investment Board, making it the largest commercial real estate transaction ever recorded in Asia Pacific and globally for 2024. RELATED NEWSHilton strives to have over 1,000 hotels by 2025Hotel investments in Asia Pacific rise by 33% year-on-year in the first half of 2022: JLLERA Realty opens Apac headquarters in Singapore
PwC and the Urban Land Institute (ULI) released their annual Emerging Trends in Real Estate Global Outlook on March 12th, which highlighted concerns among property investors in the Asia Pacific (APAC) region. According to the report, low yields and “sluggish” transaction volumes were among the top concerns.
The report is based on survey responses from global asset managers, including Blackstone, Savills Investment Management, and CBRE Investment Management. Over 70% of respondents identified low yields, high interest rates, and geopolitical tensions as their main concerns.
Despite these concerns, the APAC region continues to be attractive to investors as a diversification strategy. The region’s population growth and demographic metrics, along with its diverse monetary policies, such as Japan’s plans to increase short-term interest rates, make it an appealing destination for investment.
In 2020, real estate transactions in the APAC region grew by 13% compared to the previous year, outpacing the growth in Europe, Middle East, and Africa (EMEA) and the Americas. However, as Europe and North America enter a new capital markets cycle and transaction volumes are expected to improve, the APAC region may see “sluggish” transaction volumes.
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The report also highlighted the impact of a decrease in transaction volume on liquidity in the APAC region, with China seeing a 25% decrease and Hong Kong SAR seeing a 1% decrease in transaction volumes. In contrast, concerns among investors in Europe focus on international political instability, further escalation of regional conflicts, and economic growth.
Data from MSCI, a US-based research and data analytics company, show that US commercial property prices stabilized in 2020, with just a 0.7% decrease compared to the previous year. This may lead investors to shift their attention and capital towards Europe and North America in the coming months.
The survey also revealed that data center assets were considered the most promising for investment and development across all three regions in 2025. According to Green Street, a New York-based research firm, global demand for data centers reached record levels in 2020, with rental rates increasing at double-digit pace. MSCI also predicts a standout year for data centers in 2024, with more than a 60% increase in acquisitions in the US.
Last year’s largest commercial real estate transaction in Asia Pacific and globally was the acquisition of data center company AirTrunk by Blackstone and the Canada Pension Plan Investment Board (CPP) for over $16 billion. This further highlights the growing interest in data center assets among investors.