Asia is the only part of the world that saw an increase in the size of its institutional real estate stock last year. It’s also the place many investors consider the best investment bet for years to come, thanks to its solid fundamentals and good growth potential. But while the data looks attractive on paper, doing business in Asia is another thing entirely. What do the property investment professionals who crunch the numbers consider the region’s most attractive markets? And what are the pitfalls of investing in Asia?
From the Current Issue
India’s economy has emerged largely unscathed from the global financial crisis of 2008 to 2009.Given India’s positive growth fundamentals, private equity real estate investors operating in India have been able to generate attractive returns from investments in various sectors, including value-oriented residential housing and budget hotels. In particular, value-oriented housing is the Indian real estate segment least sensitive to global market conditions, with demand buoyed by long-term fundamentals such as rising urbanization, income growth, youthful demographics and a burgeoning middle class with substantial savings and increasing purchasing power.
In mid-2010, many observers are concerned that the global economy and financial system is faltering, and that the way forward is unclear. In this article, we look at how far we have come in the past two years and consider the prospects for the future and the role of real estate in that future.
Australia tops Jones Lang LaSalle’s Global Transparency Index worldwide. Of the 15 economies in the Asia Pacific region that are included in the 2010 index, New Zealand also was rated as highly transparent. Four others — Singapore, Hong Kong, Malaysia and Japan — were rated as transparent, on a par with mature European markets. And although the Asia Pacific region includes the most transparent market, it also contains some of the world’s least transparent markets, such as China’s tertiary cities (ranked 65th) and Vietnam (ranked 76th).
Sally Haskins is senior vice president, real assets, with Callan Associates, a consulting firm based in San Francisco. She is responsible for strategic planning, implementation and performance oversight of clients’ real estate portfolios. Haskins heads manager due diligence and strategy research for Asian real estate markets and investment products. Her role also includes new business development for the real estate consulting group. Dr. Jennifer Molloy, editor of The Letter – Asia Pacific, recently spoke with Haskins about investor needs in the aftermath of the global financial crisis and current investment opportunities in the Asia Pacific region.
China's economy grew by 10.3 percent annualized in the second quarter as compared with the same period a year earlier. The percentage was lower than first quarter 2010’s growth of 11.9 percent. Several questions came to mind right away. Should we take this second quarter figure as an indication that the Chinese government skillfully slowed down what is perceived to be overheated growth, or is this a sign of more serious weakness coming our way?