Investors Remain Upbeat On Asia Pacific’s Property Markets
Asia Pacific – Institutional investors remain optimistic on Asia Pacific’s real estate market, according to a commentary published by the South China Morning Post (SCMP) on Monday evening (18 January).
The author of the opinion piece is Nicholas Spiro, a partner at Lauressa Advisory, a property and macroeconomic advisory company headquartered in London. Apart from being a regular commentator on financial matters, he is also an expert on advanced and emerging economies.
In his latest commentary, he cited the annual Investment Intentions Survey published on 13 January 2021 by the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV), the European Association for Investors in Non-Listed Real Estate Vehicles (INREV), and the Pension Real Estate Association (PREA) in the United States.
Based on the study’s findings, 77 percent of those polled said they will not change their investment plans in Asia Pacific, despite the dismal 2020 due to the COVID-19 pandemic. In fact, 72 percent intend to increase their investments in the region’s property markets over the next 2 years, compared with 57 percent and 51 percent who said so for Europe and the United States respectively.
In particular, the top property investment market in the region is Sydney, with 81 percent of the respondents saying so. This is followed by Melbourne (71 percent) and Tokyo (68 percent). At number 4 are China’s Tier 1 cities (48 percent), while Osaka and Seoul are tied at the 5th spot with 45 percent each.
The 7th place is shared by China’s Tier 2 cities, Singapore, and other Japanese cities with 35 percent each. Finally, the 10th spot was claimed by other Australian cities (32 percent).
“The survey found that the pandemic had made investors more cautious. Respondents favoured core investments over value-add or opportunistic ones,” Spiro explained.
The former consists of Grade A office towers in prime locations, as well as low-return, low-risk properties in liquid markets, especially those leased on a long-term basis to creditworthy tenants. The latter comprises assets that can yield higher returns but need to be repositioned, redeveloped, or rebuilt from scratch to attain their potential.
“This is why Sydney, Melbourne and Tokyo – which are among the most established and transparent real estate markets in Asia – were respondents’ top investment destinations, and why the widely traded office sector was their preferred asset class,” he noted.
The survey saw a total of 99 respondents, including 15 funds of funds managers and 84 institutional investors, which collectively have a minimum of US$846 billion in property assets under management (AUM).