Outlook 2024: Three APAC real estate investment hotspots

Institutional real estate investors are targeting Japan's underserved logistics hubs, Australia's burgeoning build-to-rent sector, and Korea's rising co-living spaces amid a resilient market outlook.
Outlook 2024: Three APAC real estate investment hotspots

The Asia Pacific real estate market is expected to start recovering in 2024, characterised by stable capital values, income resilience, and rental growth, though progress is projected to differ significantly across locations and sectors.

Market predictions show that logistics in Japan, build-to-rent properties in Australia, and co-living spaces in Korea are the top three opportunities recognised by the investment industry along with a “flight to quality” propelling the region’s office sector.

Cuong Nguyen,

The diversion of pricing trends between Japan and other major regional markets will likely continue in the coming years, according to Cuong Nguyen, head of Asia-Pacific investment research at PGIM Real Estate.

“Having been a counter-cyclical market during the past two years, Japan’s investment market is likely moderating. By contrast, we expect real estate capital values to stabilise and recover in Asia ex-Japan markets,” Nguyen told AsianInvestor.

PGIM forecasts growth to be strongest in logistics and office, and expects retail to lag. At the country level, the firm expects Australia and South Korea to show a firmer recovery than others over the next few years.

“We see attractive investment opportunities driven by a combination of better entry prices and rental growth prospects underpinned by structural shifts in occupier trends,” said Nguyen.


Despite the rise in construction in recent years, there is still a significant undersupply of modern logistics space across Japan, according to James Kemp, head of Asia-Pacific real estate at Macquarie Asset Management.

James Kemp,
Macquarie Asset Management

“Whilst there are certain sub-markets that will take a few years to work through some oversupply, there are other sub-markets, including opportunities in logistics hubs, that are emerging in response to the ‘2024 problem’ that continue to see unmet tenant demand,” Kemp told AsianInvestor.

Investment in Japan continues to benefit from the availability of financing at positive spreads and strong domestic liquidity through public and private REITs, he said.

Across the region, logistics and residential sectors are teeming with potential, according to Louise Kavanagh, chief investment officer and Asia-Pacific head of real estate at Nuveen. She told Asianinvestor that Nuveen continues to focus on structurally attractive markets backed by resilient income.

Louise Kavanagh,

"Purpose built student accommodation in key Australian capital cities, senior housing in the major Japanese metropolitan areas and debt in Australia. There are also selective interesting logistics opportunities in Greater Seoul and Tokyo alongside non-discretionary retail in Australia,” said Kavanagh.

Also bullish on the Australian market was Michael O’Brien, managing director at QIC Real Estate, who pointed especially to its potential for high-quality retail assets. He also highlighted the market’s mixed-use town centres, a trend that aligns with the country's broader urban development plans.


In addition to the traditional real estate sectors, alternative living spaces like build-to-rent in Australia and co-living in South Korea are gaining momentum as attractive investment opportunities, according to Macquarie’s Kemp.

“Australia build-to-rent is a sector expected to benefit from the structural undersupply of housing in Australia, which has resulted in strong long-term rental growth,” said Kemp.

“As the sector continues to institutionalise, it should experience strong liquidity as capital looks for exposure to the living sector in Asia-Pacific, and Australian BTR will present one of the limited opportunities to invest in a transparent market at scale.”

Co-living in South Korea has emerged as a defining trend in the country’s residential market, supported by new regulation giving recognition to the offering.

“Strong market demand drivers, including renters who prefer more globally used monthly lease payments to the traditional ‘Jeonse’, or deposit-based rental system. Elements of dislocation in the market may provide attractive entry points,” said Kemp.

Amélie Delaunay,

Amélie Delaunay, senior director for research & professional standards at ANREV, also sees potential in the "beds and sheds" sector due to strong demand and a shortage of new supply, particularly in countries like Australia and Japan.

“Traditionally, Australia and Japan, particularly Sydney, Melbourne, and Tokyo, have been the main institutional markets in the region,” Delauney told AsianInvestor. These markets have continued to attract institutional capital as investors continue to shift away from China, she said.


Delaunay also highlighted office markets across the region, especially in Seoul and Singapore, for their robustness.

“Low vacancy rates and promising rental growth prospects make these markets standout choices for investors looking for stability and growth,” she said. A "flight to quality" within the office market is becoming increasingly evident as companies prioritise high-quality office spaces.

Michael O'Brien,

Businesses want to “earn the commute” for their staff and to, importantly, meet environmental, social and governance (ESG) priorities, according to QIC’s O’Brien.

“Coupled with low unemployment, high population growth and a lack of supply in quality office assets, these factors are driving positive rental growth and reduced vacancy across the premium end of the office market in Australia’s major central business districts,” O’Brien told AsianInvestor.

As a result, O’Brien expects to see acquisition opportunities for quality assets materialise in 2024 for discerning investors willing to take a through-cycle view and secure assets that rarely trade.

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