Note: % denotes rental change between an expiring lease and the rent in a newly signed lease.
Source: JLL

Also compelling is the rent reversion across Asia’s more mature markets. Singapore, Hong Kong and Tokyo could record rental uplift of between 8 and 15%. Beijing and Seoul also show positive rent reversion, but at a more modest pace.

Rents will be an important component for investors looking to shield returns from the assault of rising interest rates. Yields in markets such as Australia, New Zealand and South Korea have decompressed by more than 50 basis points in 2022. And with more decompression expected, this will further erode portfolio returns for many investors in 2023. Investors with existing L&I portfolios positioned to take advantage of rent reversion in 2023/2024 are well-placed to navigate the current environment. And for those without current exposure but looking to capitalise on the rent reversion upside, being selective and patient for the right opportunity will be key. Our recent Investor Sentiment Barometer suggests slower transactional activity and lower competition for assets this year. If investors can find comfort in targeting the right assets, they may be able to protect returns across their L&I portfolio. This will be especially important in an environment that is without the safety of a rising tide.