The View | Asia’s commercial property market growing in diversity and complexity

International comparisons are fraught with difficulty, especially when it comes to contrasting markets in different regions of the world. Stages of economic development, cultural factors, levels of financial market maturity and transparency and drivers of growth can differ significantly, often making comparisons inapt or misleading.

However, provided these divergences and idiosyncrasies are taken into account, cross-regional themes and trends merit scrutiny. In the commercial property industry, one of the most insightful comparisons is sector diversification in different parts of the world.

According to JLL, office and retail assets – the two main traditional types of commercial property – accounted for 60 per cent of core real estate funds’ allocations in the Americas in 2016, with the United States comprising the bulk of investment. Industrial and logistics properties and the living sector, which includes professionally managed rental housing and purpose-built student accommodation, had a combined 40 per cent share.

In the Asia-Pacific, by contrast, office and retail properties accounted for as much as 83 per cent of real estate funds’ allocations in the region. Even in 2019, the two sectors still had a combined 68 per cent share.

This data must be put into context. First, non-listed core real estate fund data for the Asia-Pacific is based on a small number of funds focused on the region’s developed markets, in particular Japan and Australia.