Bound by Risk: Under What Circumstances Should Risk Premiums for Asia Be Reduced?
Given how Asian real estate markets have grown and matured, does it still make sense for foreign investors to require sizeable risk premiums to invest in the region? Investors have different needs in terms of returns, and different comfort levels with known and unknown risks in particular markets, so there will never be a one-size-fits-all answer.
Having said that, investors ought to be reducing their risk premiums in any region where there is improvement on several fronts, according to Shane Taylor, head of research and strategy, Asia Pacific, for CBRE Global Investors. These fronts include macro-economic and fiscal management, the legal/regulatory environment, market transparency (including investment performance metrics), the quality and quantity of real estate markets, currency trends, industry governance, and the depth and sophistication of local capital targeting real estate assets.<