The investment market ended 2018 on a high note as transaction volume surged by 77% q-o-q to above US$40 billion. However, full-year transaction volume fell by 10% y-o-y to US$126 billion. Most key markets in the region recorded a busy quarter, led by China, Singapore and Korea, where foreign investors turned more active. Cross-border investment jumped by 264% q-o-q to US$16 billion in Q4 2018 on the back of increased intra and cross-regional capital inflows.
Office leasing momentum gradually slowed in H2 2018 amid an uptick in global economic uncertainty and weaker business sentiment. Net absorption fell by 40% q-o-q to 8.9 million sq. ft. NFA in Q4 2018, although the full-year total rose by 1% y-o-y. Regional rental growth stood at 5.5% y-o-y in 2018, the largest gain since 2011. 55.3 million sq. ft. NFA of new office supply was completed in 2018, an increase of 7.2% y-o-y.
Retail market sentiment was stable in Q4 2018 in what is traditionally a quiet period for new leases. Demand was led by F&B while strong expansion was also witnessed by entertainment and fitness operators. New retail supply stood at 20 million sq. ft. in Q4 2018, bringing the full year total to 50 million sq. ft., an increase of 5.1% y-o-y. Retail rents rose by 0.4% q-o-q.
Logistics demand maintained strong momentum, driven by the growth of omnichannel retailing; rapid 3PL expansion in Asia; post-GST large-space consolidation in India; and new infrastructure projects in the Pacific. Full-year net absorption in Asia was unchanged on an annual basis at around 63 million sq. ft.. Vacancy was unchanged in most markets. Rents registered growth of 0.4% q-o-q in Q4 2018, while annual growth stood at 3.0% y-o-y, the highest since 2013.