Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Germany
Hong Kong
Switzerland
Singapore
United Kingdom
Other / International
Hines, a global real estate investment manager, presents a compelling argument for incorporating Asian real estate into global investment portfolios, emphasizing the region’s unique advantages and growth potential. According to Hines, Asia’s real estate market is underpinned by four fundamental pillars that make it an attractive investment destination.
The first pillar is the positive regional growth outlook. “Asia has become wealthier, economically stronger, and more self-reliant,” says Tim Jowett, Head of Asia Research at Hines. The region has been a major contributor to global growth and is expected to maintain this role in the future. “These trends are underpinning healthy real estate demand fundamentals,” states Jowett.
Secondly, Hines highlights the increasing benefits of diversification. The correlations between Asia and the markets in the United States and Europe have diminished as economic growth patterns and trade relationships evolve. This shift has reduced the synchronicity between Asia’s major economies and real estate markets, promoting intra-regional diversification. As per Jowett, “intra-regional diversification supports a more stable return profile (lower downside volatility) and attractive risk-adjusted returns, including currency impacts.”
The third pillar the real estate investment manager names is the depth of opportunity in Asia. The region offers a broad scope of value-add opportunities in both traditional and alternative asset classes, supported by secular growth trends. Resilient, low-volatility sectors with strong rental growth further enhance the investment landscape. “Asia offers differing risk/return profiles from other global regions with meaningful differences within region by sector, and with supply constraints helping to support positive rental growth,” emphasizes Jowett.
The fourth pillar is the attractive entry points for investors. “Investors can tactically deploy capital by focusing on pockets of emerging value in different countries at different cyclical positions driven by rates and pricing. Since 2022, Australia and New Zealand have demonstrated more substantial moves in rates than North Asia with consequential impacts on liquidity and market pricing,” explains Jowett.
However, despite these positive factors, investors face significant headwinds in the global real estate market, which is undergoing a generational transition. With central banks moving away from the low-interest-rate policies of the recent past, real estate values have had to adjust to much higher long-term debt costs. Additionally, structural changes in supply and demand fundamentals across various real estate sectors and asset classes have been accelerated by shifts in work, living, and recreational patterns due to the global pandemic. The growth of China’s economy has slowed, and geopolitical changes have restructured global supply chains.
Nevertheless, the situation in Asia diverges somewhat from the global landscape, making Asian real estate a valuable component of a diversified global investment portfolio, Hines opines.
Looking ahead, the investment firm believes that a diversified, well-constructed pan-Asian portfolio can capture attractive market beta through exposure to markets and sectors with the strongest growth prospects.
“We believe that fundamentals are pointing in a positive direction in Asia. Estimates of future economic growth in both Developing and Developed Asia are double that of the rest of the world, and the possibility of more stubborn inflation could provide a further boost to rent growth,” Jowett concludes.
