As the Asia Pacific commercial real estate market reaches the peak of the interest rate hike cycle (excluding Japan), investors are presented with a prime opportunity to acquire discounted assets in specific markets and sectors. With asset repricing beginning to take shape, the current environment is favourable for both buyers and sellers aiming to capitalise on shifting market dynamics, according to a recent report.

Office Sector: Strategic Entry Points

Markets such as Australia, Korea, and India offer promising entry points in 2024, particularly for office spaces. These markets are expected to experience rental growth, making them attractive to investors. Core assets with strong Environmental, Social, and Governance (ESG) credentials are increasingly in demand as deadlines for occupiers' net-zero commitments draw closer. In Seoul, rental growth is anticipated to persist, but owners may want to realise returns as growth rates normalise.

Industrial & Logistics: High-Potential Markets

Industrial and logistics assets in regions with strong manufacturing occupier demand, such as Southeast Asia, India, and regional Japan, are forecasted to outperform. These areas are set to benefit from increased interest, providing investors with robust growth opportunities.

Retail Sector: Renewed Focus on Core Locations

With retail occupier demand shifting back to core locations, the rental outlook for markets like Vietnam and Hong Kong SAR has been upgraded. In Japan's Ginza district, vacancy rates have dropped to just 1%, enhancing the attractiveness of core retail assets.

Living Sector: Accelerating Demand

Despite its limited scale in Asia Pacific, the living sector continues to see accelerating demand. Investors are encouraged to focus on established markets like Japan, where cash-on-cash yields remain compelling. Additionally, there are opportunities in developing or acquiring build-to-rent or student accommodation projects in markets with significant supply shortages, such as Australia and Hong Kong SAR.

Credit Strategies: Cyclical and Vintage Opportunities

Credit strategies remain viable, with bridge loans and development finance available in markets with substantial funding gaps, including Australia and Korea. Opportunistic and credit fund investors are increasingly targeting the office and residential sectors in mainland China, where weakening fundamentals have led to notable discounts.