For many institutional real estate investors, Asia has always been a contradiction of sorts. On one hand is the allure of new markets, which offer investors a chance to supercharge returns, diversify geographically and round out their portfolio allocations. On the other hand, barriers to entry, both real and perceived, have been legitimate obstacles that have kept some investors on the sidelines or in markets on familiar turf. Yet the siren song of the vast Asia Pacific real estate markets is simply too great to ignore for institutions. In fact, there is a compelling argument to be made that right here and right now we are witnessing a major secular shift in the dominant engine that will power future generations of the global economy.
From the Current Issue
Japan’s REIT industry was officially born on 10 September 2001 — just one day before terrorists flew two planes into the World Trade Center. Looking at the recent performance of Japanese REITs (J-REITs), which were down 52 percent year-to-date as of 31 October 2008, one would think that it’s been destined for hard times since the ill-fated timing of its inception, but that masks the reality of the situation.
Nori Gerardo Lietz is chief strategist for private real estate investment management with Zug, Switzerland–based global alternative investment manager Partners Group. In 2007 Partners Group acquired the discretionary real estate asset management side of U.S.-based Pension Consulting Alliance, a firm she co-founded. Gerardo Lietz recently spoke with The Institutional Real Estate Letter – Asia Pacific editor Jennifer Molloy about the impact of the global financial crisis on the Asian real estate market.
China has become a destination for international real estate investors, ranging from financial institutions to private equity funds, and from sovereign wealth funds to real estate developers. Investors are attracted by a market characterized by both rapid growth and scale. A developing economy with the scale of China offers investors the opportunity to create attractive and substantial investment platforms of multiple investments across wide geographical areas. Investors entering China for the first time, however, often find the process of successfully structuring and completing deals a daunting task.
Welcome to the first issue of The Institutional Real Estate Letter – Asia Pacific. The idea to create an Asia Pacific publication has been with us for a number of years. Given institutional investors’ interest in Asian real estate and the amount of capital invested and committed to Asia Pacific, one can argue that this publication is long overdue.