The Australian property market is sophisticated and highly securitized, but it is not very large, with only one or two primary markets, along with a few resource-reliant secondary markets. At the same time, Australia has sophisticated institutional investors that have been investing in property for many decades. Given historical investment habits of Australian investors and current property market conditions in the country, how active are domestic investors — and how active do they need to become — in investing in property overseas in order to meet the performance needs of their portfolios?
From the Current Issue
In early February, we held our annual Visions, Insights & Perspectives (VIP) conference in Scottsdale, Ariz., USA. The conference attracted more than 360 attendees, one-third of which were investors. On the first day, we had three executive workshops, and I was assigned a task of moderating Building a Global Real Estate Portfolio with Emerging Markets: Brazil, Russia, India, China.
While office markets around the world began 2011 strongly, a steady increase in uncertainty led to a major bump in the road to recovery taking shape during the third quarter of the past year. The outlook for 2012 is conservative as a result: relatively stable, perhaps, but slow and cautious when set against the backdrop of a weaker global economy.
As the REIT regime has been expanding globally, best corporate governance practices in emerging Asian REIT markets have become a focus for domestic and international investors alike. Idiosyncrasies stemming from the ownership models applied in Asian economies and the fact Asian REITs are often externally managed “captive entities” highlight the importance of corporate governance of the listed real estate sector in Asia. To assist this, the Asia Pacific Real Estate Association (APREA) has developed an analytical framework aimed at scoring corporate governance practices among externally managed Asian REITs. The framework presented in this article was introduced in 2010 at APREA’s Property Leaders Forum and adapted to Singapore and Malaysia, where the first scores were disclosed in spring 2011. APREA’s goal is to publish on a yearly basis a list of top Asian REITs in terms of corporate governance, starting with Singapore, Malaysia, Hong Kong and Japan.
As in most markets worldwide, Japan also suffered from a decline in real estate prices following the financial crisis in 2008. Although the loss in asset value varies depending on individual assets, some properties experienced a decrease in real estate value of more than 30 percent.