Vietnam and India rank as the most popular developing markets, according to the Emerging Trends in Real Estate® Asia Pacific 2018 report, published by the Urban Land Institute (ULI) and PwC.
In Vietnam, investors continue to draw favorable comparisons with the China of 10 to 15 years ago. GDP growth is in the area of 7.4 percent, and while bureaucracy remains an issue, the regulatory environment is becoming slowly less restrictive.
Notably, the survey ranked Ho Chi Minh City among the highest in terms of rental value growth, reflecting confidence that economic strength will spill over to property values. Very little prime office stock has been built in recent years, meaning very few stabilized assets are available to buy. That leaves the residential sector as the default play for most investors, usually in conjunction with a local joint venture partner.
Like Vietnam, investment in India tends to be strategic in nature, aimed at front-running long-term economic growth resulting from reforms being rolled out by a popular government intent on tackling India’s enduring inefficiencies. Unlike Vietnam, however, India offers massive scale, a factor that makes it especially popular for funds deploying large amounts of capital.
Over the last few years, various large global opportunistic and institutional funds have made big commitments to the Indian office sector — mainly in the form of business parks, and many of these early entrants are now either consolidating their holdings or looking to exit via India’s nascent real estate investment trust (REIT) market, which is likely to see its first initial public offering (IPO) in the first quarter of 2018, according to several interviewees.
And India’s logistics sector has recently been the target of an investment boom, largely due to tax reforms. In addition, retail assets also are now a popular play, with a number of platform or portfolio deals either already completed or in the works.
The top 10 investment markets are as follows:
- Sydney, Australia
- Melbourne, Australia
- Singapore
- Shanghai, China
- Ho Chi Minh City, Vietnam
- Shenzhen, China
- Tokyo, Japan
- Guangzhou, China
- Auckland, New Zealand
- Osaka, Japan
