Asia looks great in theory, with demand for real estate bolstered by rising incomes, rapidly growing urban populations and some of the fastest economic growth rates on the planet. But what do the statistics truly indicate? The financial crisis showed that no matter how impressive your market’s prospects on paper, there’s no substitute for the kind that crinkles, cash.

The purpose of this article is to question whether the use of debt in real estate investment is, indeed, a prerequisite or if “unleveraged” returns are a realistic alternative. It is pertinent to ask this question at this time, as excessive debt in some property funds has harmed rather than assisted performance.

Having emerged from the financial crisis in relatively good shape, China has arrived at a crossroads. In the aftermath of such a watershed event, China is facing a greater urgency than ever before to restructure its economy and transform its economic growth pattern. Of more direct relevance to real estate investors is how policymakers’ attitudes toward the property sector might change, given the greater impetus to press forward with restructuring efforts. Healthy and sustainable growth of the residential sector is vital in order to facilitate continued urbanization and stimulate private consumption, both key elements of the restructuring strategy.