Emerging risk: Do the rewards outweigh the risks in Asia’s emerging property markets?
The emerging nations of Asia surely beckon global institutional property investors, who desire diversity in their portfolios, exposure to growing markets, and higher returns than available in the sometimes-saturated real estate scene of the developed world.
But as many an international investor will recount, while emerging markets entice, they present pointed risks as well, especially for institutional property buyers and developers. Direct buyers of large properties typically invest for the long term, with a multi-year exit strategy at a minimum.
Certainly, the institutional property investor must be intrepid, as large-scale commercial real estate is generally an illiquid investment in a world fraught with business, economic, regulatory and geopolitical risks. Development projects are even more exposed to unanticipated setbacks.
As if all the above were not daunting enough, experts sometimes privately grouse about “partner risks” when working in emerging ma