News release

China commercial real estate investment totalled US$24.8 billion in 2022

Strong Q4 investment rebound provides renewed optimism for 2023

February 07, 2023

Shanghai, February 7, 2023 – A tightening interest rate cycle and global macroeconomic uncertainties influenced decision-making, resulting in a 27% year-on-year decline in direct investment in Asia Pacific commercial real estate. According to global real estate consulting firm JLL (NYSE: JLL), investment, totaled US$129 billion for the full-year 2022, in line with the firm’s projections. China registered a full year transaction volume US$24.8 billion, a drop of 37% year-on-year.

However, investment activity picked up in the fourth quarter, with a 12% increase quarter-on-quarter in Asia Pacific supported by a 125% increase in China, reinforcing JLL’s conviction that the slowdown is likely to moderate in 2023.  

China: investors regaining confidence

High interest rates in the US, persistent Covid disruptions as well as developer liquidity issues contributed to a challenging investment environment in China last year.

Despite these challenges, Q4 2022 provided a silver lining with investors regaining confidence in the market. Total fourth quarter transaction volume rebounded 125% quarter-on-quarter as a series of policies and initiatives aimed at revitalizing the property sector were introduced. Developers’ liquidity concerns were addressed and allowing for financing ensured completions of projects, boosting market confidence.

According to JLL, real estate will continue to play a significant role as a “pillar of China’s economy” with REITs destined to expand into other asset types allowing investors a clear exit strategy. Though arguably the biggest boost came when China officially announced the end of Covid regulations.

China’s rental housing boomed in 2022, especially with the launch of C-REITs bolstering investors’ confidence. Rental housing transactions were diverse in 2022 with both domestic and foreign Investors committed to acquiring a wide range of assets. With rental housing REITs successfully launched and performing strongly, transaction activity is expected to continue.

Office remained the most popular asset class in terms of investment volumes, rebounding significantly in 4Q22; Logistics landlords rationally repriced their assets as investors show a more cautious approach despite sector resilience. Despite the anticipated decline of transactions in sub-first tier cities and substantial supply in the pipeline, 2023 will see favourable policies inject more confidence in the market. With travel restrictions lifted, investment in hotels is expected to return as international and domestic travellers will drive demand in the hotel sector.

“Looking ahead into 2023, we anticipate investors being cautiously optimistic. With China focusing on growing the economy, the first half of the year will see a unique window to acquire assets with lower pricing,” says Eric Pang, Head of Capital Markets China, JLL. “This year should see a rebound in traditional asset classes, especially office assets, while the first six months should see continued interest in rental housing given beneficial policy initiatives.”

Asia Pacific: investment rebounds in the fourth quarter

“Investors reset short-term deployment strategies in 2022 but remain committed to the longer-term prospects of the Asia Pacific real estate market. Price discovery will continue to be a major theme for investors in 2023 and is poised to influence deployment strategies for the first half of the year as bid-ask spreads tighten. Encouragingly, factors including the reopening of China, an expected recovery in Japan, and the belief that Asia Pacific will be the least impacted region by any global economic slowdown, bodes well for a strong resumption of activity in the second half of 2023,” says Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL.

Singapore emerged as the region’s best-performing market in 2022 with total commercial real estate investments climbing by 53% year-on-year. Supported by robust first half office market activity and a sizable one-off retail portfolio transaction in December, Singapore drew US$14.2 billion in direct investments. Hong Kong’s attractiveness improved following the relaxation of Covid-19 curbs. However, with full-year investments of US$7.7 billion, the market was down 24% year-on-year.

South Korea was the most active investment market in 2022 with US$26.2 billion in transactions despite posting an 11% year-on-year decline. A solid rebound in the fourth quarter pushed volumes in Japan to US$24.7 billion for the year, down 40% on 2021. Australia, grappling with a disconnect between buyer and seller expectations, saw a decline of 38% year-on-year for a total of US$20.9 billion invested.

The hotel sector was Asia Pacific’s best-performing asset class in 2022 compared to the prior year. Backed by the resumption of business travel and tourism, it attracted US$10.1 billion in capital, up 7% year-on-year.

Office, which remained the region’s most traded asset class, finished the year with US$60.5 billion in investments, down 18.7% year-on-year as investors became more selective as the bifurcation between core and secondary assets continued to play out. Logistics and industrial transactions declined 46% year-on-year with $25.9 billion in capital deployed. Retail real estate volumes regionally were US$23 billion for 2022, a year-on-year decline of 39%.

“Green shoots in the fourth quarter ensured that the challenging investment market ended 2022 on a more optimistic note, snapping a year of volume declines. We expect the bright spots of strong fundamentals in select office markets, value-add retail, and cyclical and opportunistic buying in the region’s more mature markets to help drive deal flows in 2023,” says Pamela Ambler, Head of Investor Intelligence, Asia Pacific, JLL.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 102,000 as of September 30, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit