For those of us in the Asia Pacific real estate finance industry, 2018 has been unusual because geopolitics have been a dominating factor in generating performance. Since the second quarter, trade disputes between the United States and China have affected all major markets in the region, and the deterioration of US-China relations has spread beyond trade issues. We believe Asia’s economic fundamentals are still stable, and the real estate sector should continue to perform in 2019. Trade friction and other geopolitical risks, however, will continue to dominate headlines in at least the early months of 2019, adding uncertainty to the region.

Against this geopolitical backdrop, REITs have provided much-needed diversification benefits for equity investors in the region. Of all Pacific markets covered by the MSCI Pacific Index, all major Asian markets experienced negative year-to-date performance as at 26 October. From their respective peaks in January, Hong Kong’s Hang Seng I