Real Estate Outlook – APAC, Edition May 2023

1Q23 economic outcome was mixed and points to a continued weakness. Disinflation endures with more central banks hitting the pause button. Transactional market was lifeless in 1Q23 but shows some signs of bottoming. Opportunities are starting to emerge as sellers lower their expectations.

Wai-Fai Kok, Head of Real Estate Research & Strategy – Asia Pacific

APAC GDP growth is projected to accelerate from 3.1% in 4Q22 to 4.2% 1Q23, according to UBS IB. However, the strong headline number belies a weak showing in a number of countries reported so far. China, Hong Kong and Japan showed strength on the back their late reopening’s activity normalization. Beyond that, however, the picture is downbeat. Taiwan’s GDP shrank 1.8% QoQ and is in a technical recession after two consecutive quarters of decline. Singapore contracted 0.7% QoQ while South Korea and Malaysia failed to recoup their previous quarter’s losses.

Asian exports grew 3.3% QoQ (seasonally-adjusted) in 1Q23 after a high-single digit decline in 4Q22. However, the rebound was almost entirely driven by Chinese exports while most other countries continued to falter. We expect external demand to stay weak in the near-term driven by the ongoing preference for services over goods, semiconductor downcycle and softening global growth.