M
arket dynamics are shifting across Asia, but new opportunities are emerging in real estate investment. At the ULI Singapore Annual Conference, a panel discussion brought together experts from financial institutions, real estate investors, and developers to explore the complexities in Asia's built environment.
Despite a global downturn in investor sentiment, Singapore remains attractive due to its investor-friendly policies. However, navigating higher interest rates is challenging, particularly when it comes to forecasting and market impact. Caleb Shen of Hines noted that the direction of interest rate changes is more important than their size or speed, and that real estate returns will depend on active asset management.
Recent stimulus measures in China warrant consideration, as the challenge lies in sparking demand rather than providing liquidity. The risk premium has increased since the Covid-19 pandemic, making real estate investment trickier to navigate. However, Terence Tang of Atelier Capital Partners sees opportunities for Asian investors who can take a longer-term view.
Markets in other countries remain ripe for investment. Research shows that inflation strongly correlates with rental growth in developed Asia, and Japan's higher inflation rates are driving wage growth. In Australia, demographic trends support rental growth despite elevated vacancy rates and high construction costs.
Developing markets in Southeast Asia offer ample opportunities, with liquidity and institutional capital being key criteria. Ee Lynn Chow of Ivanhoe-Cambridge highlighted India as a bright spot, driven by strong growth, manufacturing, domestic consumption, and urbanization.
Megatrends such as climate change, shifting demographics, and ESG principles are influencing the future of real estate development. Moderator Pamela Ambler noted that companies will be required to improve their climate targets under evolving sustainability reporting standards, creating opportunities for investors in older buildings.
New asset classes and growing demand for multifamily housing, logistics, and technology are emerging, including data centers that blur the lines between real estate and infrastructure. Indran Thana of UBS sees data centers as an interesting sector with potential for growth in the region.
The Asian real estate investment landscape is evolving due to fiscal policy changes, technological advancements, demographic shifts, and investor preferences. Investors must consider traditional asset classes and newer riskier options to make informed decisions in this dynamic market.
