Southeast Asia Outlook 2023

INVESTMENT SALES REACH A DECADE HIGH BO U N C I N G BAC K F ROM T H E PAN D EM I C

Despite a challenging investment environment amidst rising inflation and interest rates, 2022 was a bumper year for SEA property investment sales. Total investment sales in 2022 reached US$18.8 billion, a decade high.

RISING INVESTMENT SALES

Investment volumes continues to be dominated by Singapore (83% of total investment sales in SEA), as capital embarked on a flight to safety. Notable deals included Link REIT’s entry into the Singapore market via the acquisition of two top-tier suburban retail malls, Kenedix’s acquisition of a 50% stake in a CBD Grade A office development. Niche industrial assets remain sought after as evidenced by acquisitions of cold chain and self storage assets in 2022. While Singapore continues to lead investment sales, investment interest in Vietnam and Indonesia, have grown with 2022 investment sales surpassing their 10-year average. Philippines and Thailand investment sales have remained steady. While investment sales in Malaysia have fallen, potentially due to higher political risks, it remains the second largest investment sales market after Singapore. Excluding Singapore, investment sales in SEA have continued to improve, reaching $US 3.3b in 2022, about 19.4% higher y-o-y. Not surprisingly, investors are betting on supply chain diversification from

China and a rise in alternative manufacturing hubs in SEA, and this is seen by a general uptrend in industrial investment sales. SEA industrial investment sales, excluding Singapore, has doubled to US$1.22b in 2022, as compared to only $US 0.6b in 2013. Office transactions as well has picked up, with a stronger return to the office in Asian economies as compared to western economies. Hotel transactions have taken a backseat but could recover strongly in 2023 amidst the anticipated return of Chinese outbound tourists. Given the subdued economic climate, investment sales in 2023 are expected to temper off from 2022 record levels, as investors continue to take a cautious stance. Nonetheless, the long-term fundamentals remain unchanged, and SEA offers a wide spectrum of investment opportunities in a fast-growing region.

Source: RCA, Cushman & Wakefield Research Note: Excluding development sites

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