Real estate is part of the local economy. It can be seen as a contributor to the productive capacity base — as economies do well, so does property. As businesses earn higher economic profits, higher rents can be achieved. This creates the opportunity to improve a property’s income, which can then be capitalised into value. Over time, investors should anticipate real estate returns that are, at least in part, driven by economic growth.

The Asia Pacific region has delivered on this expectation. Over the decade ended in 2019, the regional economy grew some 87 percent in nominal PPP terms. With this strong economic performance, real estate as an asset class performed very well. Fund returns averaged close to 10 percent per year, investment volumes rose some 70 percent, and the asset class matured. Not only has real estate proven its worth in a mixed-asset portfolio, the Asia Pacific region is now a fixture in global real estate portfolios, and allocations are expected to cont