US investors increasingly eye Australia, Singapore, Japan real estate assets

The Asia-Pacific real estate market is attracting U.S. investors like flies to honey. 

U.S. investment in Asia-Pacific real estate increased 31 percent year-over-year in the second quarter, the South China Morning Post reported. 

International real estate investments in Asia-Pacific climbed up to $12.1 billion in the second quarter, marking a 50.1 percent increase year-over-year and the highest level since the third quarter of 2022, according to a Knight Frank report cited by the South China Morning Post. US investors led the way, pouring nearly $5 billion into the region, making up 41 percent of total foreign investment.

“U.S. investors have always been active in the Asia-Pacific region, which offers exposure to both emerging and mature markets, enabling a balance between potential and stability,” Christine Li, head of research for Asia-Pacific at Knight Frank, told the South China Morning Post. “Compared with the U.S. and Europe, certain Asia-Pacific markets offer more attractive pricing and yields, especially in the office, [residential] and data center sectors.”

Australia, Singapore and Japan were among the most attractive options for foreign investors because their regulatory transparency and market liquidity partially offset economic headwinds such as slowing growth, according to Knight Frank. In Australia, foreign investments were up 119 percent year-over-year, reaching $3.8 billion in the second quarter.

Two of the largest transactions globally last quarter involved Australian assets. In June, Canada’s Brookfield Asset Management sold its retirement-home operator Aveo to The Living Company, parent company of Australia’s largest student housing provider, for $2.5 billion. In April, U.S. property manager Greystar bought an Australian student housing portfolio from Singapore sovereign wealth fund GIC and Singapore-listed Wee Hur Holdings for $1 billion.

Meanwhile, Singapore notched $2.37 billion in international deals last quarter, up 593 percent year-over-year and 158 percent from the first quarter. Japan drew $2.4 billion in foreign transactions last quarter, with most of those investments targeting residential and industrial assets.

Several central banks in the region lowering their interest rates helped reduce borrowing costs and improve returns, according to the South China Morning Post. In Japan, the interest rate—the lowest among major economies—helped bring in investors.  

“[Japan’s low interest rate] together with prospects of further upside in rents offer investors with relatively attractive spreads,” Hiroshi Okubo, Asia-Pacific head of investor thought leadership at CBRE, told the Post.

— Chris Malone Méndez