Why real estate investors are still confident

Defensive locations and sectors are among highest in demand, he says. Japan and Korea remain top of the list, as do sectors such as multifamily, non-discretionary retail, and logistics.

The survey identified Japan, South Korea, China, and Australia as the markets most likely to see an increase in transactional activity into 2021 as investors turn to core geographies as a defensive strategy to mitigate ongoing risk.

The relative stability and transparency of the Japanese market as the world’s third-largest economy, sees 56 percent of those surveyed planning to increase their exposure in 2021, cementing its status as a safe-haven destination, where income and capital value returns are relatively more stable. Meanwhile, despite China’s domestic economy slowing before COVID-19, investors polled are looking past short-term headwinds to the longer-term growth potential of the market, with 51 percent planning on increasing their exposure to the country within 2021.

“As transactional activity increases and pockets of value emerge from the crisis, we expect investors to move up the risk curve, which will include both direct and indirect exposure to real estate,” says Crow.

“As the office sector adapts to the next future of work, alternative sectors that are benefitting from demographic, technological and social development trends are set to benefit, particularly living, logistics and data centers,” says Crow.

Logistics, widely cited as the crises’ most resilient sector thanks to the growth of e-commerce during lockdowns, is likely to become even more attractive into 2021 with over 80 percent of investors surveyed looking to increase their exposure.

Multifamily is also positioned to play a significant part in the transactional rebound, with 58 percent planning to expand investment as housing shortages and affordability pressures persist in the region’s major cities.

The region’s maturing alternatives sector, comprising of data centres and student living amongst others, will also generate continued interest, with 44 percent of polled investors to enhance exposure within 2021. 

“Defensive investments will play a bigger role in this cycle, given ongoing uncertainty. However, the very definition of defensive will continue to evolve to include greater exposure to stable alternative assets,” says Crow.