By region, Australia, Hong Kong SAR and mainland China are expected to experience further repricing of office assets, particularly value-add assets in secondary locations. Although the retail sector is expected to stabilise in 2024, more than half of investors are looking to secure discounts on shopping malls and high-street shops in certain markets in order to justify the higher cost of finance.

In most markets, the rate hike cycle has paused. Investors are refraining from deploying large amounts of capital until clear signs indicate that the current repricing cycle has ended, says Dr Chin. 

Investors in most markets will likely remain cautious in the first half but may become more active later this year. And with the growing anticipation that the Fed and Asia Pacific's central banks will begin cutting rates in the second half, commercial real estate investment activity is expected to pick up over the course of this year, according to Dr Chin. 

The industrial & logistics and office sectors remained the two most preferred sectors for investment in 2024, although interest in both asset classes has waned from the previous year. The living sector is set to attract more capital in 2024, with build-to-rent and build-to-sell attracting strong interest. 

In 2024, investors in the Asia Pacific region are increasingly favouring value-added strategies to attain attractive returns. Residential assets (especially multifamily/built-to-rent) logged a strong year-on-year uptick in interest, particularly among investors considering value-add strategies. 

Investors are also turning to distressed assets and debt solutions as viable avenues to meet their investment objectives. 

Japan remains the top destination for investment, with India the preferred emerging market

According to the survey, Japan has maintained its status as the top choice for cross-border investment for the fifth year running. Singapore and Australia came in second and third place, respectively. Investors continue to be drawn to highly liquid markets offering stable return.

“Japan has an accommodative monetary policy, which has contributed to the country's relatively robust performance. This is evident in some of the commercial real estate transactions that took place earlier this year,” says Greg Hyland, Head of Capital Markets for Asia Pacific at CBRE. 

Elsewhere, India is the most preferred emerging market in Asia Pacific, with Mumbai and Delhi capturing the interest of investors seeking to expand their real estate exposure to the world’s fastest growing economy. 

The new Navi Mumbai International Airport, scheduled to open in 2024, will improve India’s regional connectivity. The development of new infrastructure in India has attracted significant interest from foreign real estate investors, says Hyland. 

"Although its regulatory regime needs to continue to develop, India's real estate market is rapidly expanding, driven by its young and sizeable population. Starting from a low base with considerable growth prospects, the current entry point is attractive. This market is poised for robust growth over the next five to ten years,” he adds.

The ‘flight-to-green’ trend continues

Dr Chin highlights that more than 60% of surveyed investors, mainly consisting of private equity funds, real estate funds and REITs, are considering retrofitting existing buildings for enhanced sustainability or ESG compliance this year.

While economic uncertainty and high financing costs might deter some buildings from going green this year, the long-term trend towards green buildings remains strong and is expected to continue, Dr Chin explains. 

Hyland further notes that, while green building attributes currently stand as the third most valued aspect by investors, following location and accessibility, the growing commitment to carbon neutrality among numerous organisations, coupled with escalating regulatory mandates, are now key motivators for developers and property owners. 

These influences are prompting the design and construction of environmentally friendly, sustainable buildings, playing a crucial role in the global push towards decarbonisation.