If you build it: A build-to-core strategy can bolster your yield and strengthen your core portfolio. But how risky is it?
In many Asia Pacific markets today, competition for core assets is increasing, the number of available assets is decreasing, and prices are through the roof. What’s an investor to do? One option gaining appeal is build-to-core: If you can’t buy it, build it. And if you build it, they will come.
Building to core can selectively offer a strategic advantage when existing assets are priced at material premiums to replacement costs. As a market strengthens, it can help investors avoid paying very high market prices and capture attractive development spreads to add value.
“We are very supportive of the build-to-core strategy, and there’s definitely growing interest among investors,” says Laurent Jacquemin, head of Asia Pacific, for AXA Investment Managers – Real Assets. “A significant number of our clients in Asia Pacific and across the globe are asking us to find develop-to-core projects for them.”
AXA IM – Real Assets focuses its Asia Pacific build