For the first time since the turn of the century, economic fortunes
in the West and East have reversed, and Asian property investments are
finally losing some of its glitter and shine.
This view comes from Pacific Star Group’s recent 2014 Asian Property Outlook and Strategy
(APOS) report, where the investment house notes how the composition of
global growth has shifted from emerging economies to developed economies
with stronger recovery momentum. Investors have also flocked to
developed countries that offer attractive entry points
Pacific
Star Group views the reversal of growth prospects and investment
activity is a natural progression as Asia comes of age. The Group
expects sustainable growth in Asia to be driven by economic integration,
urbanisation and rising incomes.
Commenting on the report Lam
Chern Woon, Pacific Star’s Vice President of Research and Strategic
Planning, said: “We see little reason to alter our positive long-term
prognosis of Asian real estate markets.
“After an extended
period of stellar growth, Asia has entered a consolidation phase in the
near term. It is thus paramount to identify the growth opportunities
before the markets pick up. Investors should actively lock themselves
onto Asia’s long term growth potential while keeping an active lookout
for opportunities that are in line with the trends playing out.”
Pacific
Star recommends a core satellite investment approach where core
investments will track the region’s medium term growth prospects, while
well-executed opportunistic investments will help bolster risk-adjusted
returns.
Asia may no longer be an investment green field,
according to the company, but pockets of opportunities remain. In
particular, the senior and youth population are rising in dominance.
Opportunities in both segments are largely untapped and successful first
movers will unlock a new paradigm of real estate investment in Asia.
The
report highlighted that the greying demographics in the region could
see a greater number of retirement communities being developed to cater
to this segment’s rising affluence and desire for an independent and
active lifestyle. Such communities have been well received in the U.S.
and Europe and the success could be replicated in Asia Pacific
countries, where the concept is still relatively new.
Youths in
the new era are different from previous generations given rising
affluence, educational standards and exposure to globalization and
technology. Retailers should adopt a careful mix of online marketing
strategies, and focus on designer and new-to-market brands to engage
this segment.
Developers can meet the desire for convenience,
differentiation and experience by providing innovative mixed-use
developments while keeping the quantum affordable.
Using its
Property Drivers Framework, which seeks to establish the attractiveness
of real estate sectors across Asia by scoring them along various
macroeconomic and real estate indicators. Pacific Star’s top
recommendations for strategic investments include:
Quality office assets in Hong Kong, Singapore and Tokyo
Besides
having strong institutions, these markets are undergoing a cyclical
recovery and face limited new supply in the near term.
Retail assets in Hong Kong, Singapore and Kuala Lumpur
International
retailers will be more selective and favour established retail
destinations like Hong Kong and Singapore. Kuala Lumpur, on the other
hand, should benefit from continued retail interest in view of its
positive demographics and resilient domestic spending. The retail
pipeline in China is large, but mismanaged assets in good locations
present great repositioning opportunities.
Residential markets in Tokyo, Singapore and Hong Kong
In
the residential sector, Tokyo’s housing market is past the worst and
new opportunities could surface in Singapore and Hong Kong, given strong
latent demand. Mass housing development remains as a viable play given
the wave of urbanization across cities.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg