Published On: Tue, Sep 8th, 2015

Private real estate: Why invest in Asia-Pacific? : Partners Group Singapore

bkcBy Accommodation Times News Services

EXECUTIVE SUMMARY

A convergence of four key growth drivers — a flourishing middle-class, swelling consumer demand, rapid urbanization and strengthening domestic business growth — has transformed the private real estate landscape in the Asia-Pacific region. Its rapidly developing cities are still experiencing growing demand for high quality office, retail and residential space, albeit with pockets of oversupply. Meanwhile, its mature metros are suffering considerable supply/demand imbalances across property segments. Astute real estate investors are afforded the opportunity to benefit from this transitional environment, as long as they have the depth of local knowledge to carefully navigate the nuanced and varied property markets in the region. Strategically, we believe three key areas of focus will yield the most compelling private real estate investment returns: buying quality assets below replacement cost in markets with strong fundamentals; buying, fixing and selling undermanaged properties in strong locations; or developing core assets and exiting to an increasingly large pool of core focused Asia-Pacific investors. Successful investors in the region have demonstrated their ability to generate attractive risk-adjusted returns, while historical correlations have validated the region’s added value as a portfolio diversifier. As a result, competition for premier assets in the region has intensified as savvy domestic capital is increasingly competing with foreign investors in the hunt for attractive real estate yields throughout the region. In this research flash, we review the opportunity set that the Asia-Pacific region provides and consider strategic approaches to unlocking value across property types. Looking forward, the Asia-Pacific region is poised to continue to offer the globe’s largest real estate investment opportunity set, and real estate investors must be equipped with local expertise in order to maximize the real estate return potential.

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