Record year predicted for APAC cross-border real estate investment in 2022

Record year predicted for APAC cross-border real estate investment in 2022

Oct 13, 2021

IT will be a record year for cross-border real estate investment in 2022 in the Asia Pacific (APAC) region, with investment volumes expected to grow by a third, said Knight Frank on Wednesday (Oct 13).

The office sector in particular is forecast to attract over half of all inbound investment into the region, with the most popular locations being Greater China, Japan and Australia.

According to Knight Frank's 2021 Active Capital Report, investment will be driven predominantly by a re-emergence of US investment managers and private equity interest in offices; top sources of capital are expected to come from the US, Singapore, Canada, UK and Germany.

Industrial will be the second most invested sector in 2022, followed by retail.

"The results from this year's report are a welcome sign of the continuing recovery in the region, linked to the resurgence of global cross-border investment into real estate," said Neil Brookes, head of global capital markets at Knight Frank.

"Indeed, as the world moves into the next phase of living with the pandemic, we could see a roaring 20's effect for real estate in 2022."

For outbound investment, the US will be the favoured destination for APAC buyers, driven by the opportunity for scale across sectors, said the report, citing the example of Singapore's government-linked companies acquiring platforms in the multifamily and data centre sectors.

There is also predicted to be a big increase in Asia-Pacific capital deployed into the UK as borders reopen and business travel can resume. Offices in the UK and gateway cities in Europe will remain in strong demand, as will pan-European logistics.

On a global scale, the US, UK, Germany, France and the Netherlands are forecast to be the top destinations for cross border real estate investment in 2022, with the US, Canada, UK and Germany predicted to be the largest deployers of cross border capital in 2022, led by investment managers, institutions and private equity investors.

Now in its 6th year, the Active Capital Report uses data and proprietary modelling to predict global real estate investment trends for the year ahead. This is the first time it has used machine learning to identify country-by-country capital flows, type of investors behind the capital and the key sectors within different destination countries.

Separately, Knight Frank also looked at the green-building effect on sales prices. The results found that prime Central London office buildings with a BREEAM Excellent rating enjoy a 10.5 per cent premium on sales price compared to equivalent unrated buildings, while those with a BREEAM Very Good rating enjoy a 10.1 per cent premium.

Prime office buildings in Melbourne and Sydney with a NABERS rating of 5+ saw a 17.9 per cent premium on sales price compared to equivalent unrated buildings, while those with a lower NABERS rating had an 8.3 per cent premium.

BREEAM is one of the most recognised international sustainability assessment methods for master-planning projects, infrastructure and buildings and recognises and reflects the value in higher performing assets across the built environment lifecycle, from new construction to in-use and refurbishments. NABERS meanwhile is a simple sustainability rating for the built environment.

Knight Frank's research identified London, Shanghai, New York, Paris and Washington DC as the world's top 5 green-rated cities for real estate. Cities were measured on a range of factors, such as well-developed public transport networks, urban green space and a high number of green-rated buildings.

Notably, these top 5 cities also have universities which are benchmarked against UN Sustainable Development Goal 11, which measures the strength of research into sustainable cities and communities.