Last year saw two major events with global ramifications — the Brexit vote and the election of Donald Trump as president of the United States. These events ratcheted up the level of global uncertainty to unprecedented levels.
Amid heightened property pricing, investors’ return expectations for core real estate assets in gateway cities across Asia Pacific may need to be lowered, or the risk tolerance may need to be adjusted upward, to maintain comparable returns.
I am going to examine some of the implications of the trend toward more focus on benchmarks, and identify some areas where increased benchmark focus can either create additional risk for an investor or create unanticipated incentives to act in ways that do not necessarily support the ultimate objectives of an institution.
For more than a decade, I have been concerned about the potential for a real estate– and debt-driven crisis in China and its potential impact on global financial markets. To date, my concerns have not been realised, but the fundamental economic principles causing my concern have grown exponentially.
Today’s low-yield environment is the primary force driving today’s higher allocations to real estate and other alternatives.
Employee health and well-being is taking on a greater focus in the Asia Pacific region, affecting real estate decision making as more companies adopt wellness programmes and invest in physical infrastructure to benefit their employees.
Due to a seemingly ever-expanding list of countries with better economic growth prospects, September extended the Asia Pacific property sector’s positive performance, with total returns of 1.3 percent.