Widely Anticipated Forecast Just Released from Urban Land Institute, PwC
HONG KONG, Nov. 29, 2012 /PRNewswire/ -- Real estate investor sentiment in the Asia Pacific property sector remains relatively positive, despite continuing global economic uncertainty, according to Emerging Trends in Real Estate® Asia Pacific 2013, a real estate forecast jointly published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC).
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However, while steady economic growth, rising incomes, and stable or increasing property values are contributing to an overall sense of optimism, the outlook is tempered by concerns among investors that prime assets in key real estate markets in the Asia Pacific region are becoming overpriced. As a result, the report finds that markets outside core cities are increasingly attractive for investment and development. This is reflected in Jakarta, Indonesia, being named the top choice for both investment and development prospects for 2013.
"With high rents, high capital values, low yields, and an abundance of local capital, many international investors are struggling to see attractive investment opportunities in Asia Pacific's prime real estate markets," commented ULI Trustee and ULI North Asia Vice Chairman Richard Price, Chief Executive, Asia Pacific for CBRE Global Investors. "As a result, investors are expanding their horizons as they seek compelling investment opportunities. Some are looking at frontier markets such as Indonesia, while others are revisiting often overlooked capitals such as Kuala Lumpur and Bangkok, which explains the strong showing for these locations in this year's report. Secondary markets such as Kowloon in Hong Kong and second-tier Chinese cities are also experiencing increased interest from international buyers. At the same time, core investment markets in many mature, western cities are seeing a surge in demand from newly formed Asian Institutional Investors seeking to capitalize on the post-global financial crisis corrections there."
"Investors' interest in alternative asset classes is also shown in our report. The overall dearth of investible options across Asian markets has led some opportunity players to migrate towards more focused strategies in niche sectors, especially where these require an element of expertise that domestic players lack," commented K.K. So, the Asia Pacific Real Estate Tax Leader at PwC Hong Kong. "These alternative asset classes provide not only a measure of protection against cheaper local money, but they also are relatively sheltered from economic volatility. The logistics sector was mentioned favorably by several interviewees, especially in Japan, where distribution infrastructure has been reorganized in the wake of last year's earthquake, and also in China, where the requirements of domestic consumers, especially in the e-commerce arena, continue to outpace the capacity of local logistics networks that have traditionally been oriented towards meeting exporter demand."
Top Investment Markets for 2013
Overall, respondents were more bullish on the prospects for individual cities, awarding higher scores than in the previous two years. The top five investment markets for 2013 are predicted to be:
In addition to Shanghai, several other cities in China – including several second-tier cities as well as Beijing – were placed in the top ten listing for both investment and development prospects. Despite concerns related to rapid growth and surging prices, the report points out that it is not unusual for emerging markets to witness unexpected price movements, and that such shifts must be viewed within the context of local market conditions.
Japan, notes Emerging Trends, continues to recover from the earthquake and tsunami of March 2011; however, a number of investors are seeing potential in the logistics sector as the country rebuilds its distribution infrastructure. While Tokyo is ranked 13th for investment prospects and 18th for development prospects, many investors feel the city's outlook is improving. It is seen as a magnet for foreign investment, with core funds looking at the office sector, and more opportunistic investors heading for the residential sector.
Emerging Trends in Real Estate® Asia Pacific 2013 provides an outlook on Asia Pacific real estate investment and development trends, real estate finance and capital markets, and trends by property sector and metropolitan area. It is based on the opinions of more than 400 internationally renowned real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants. It is being released at a series of events throughout Asia that are being hosted in November and December by PwC and ULI Asia Pacific, which serves ULI's nearly 1,000 members in the Asia Pacific region.
NOTE TO EDITORS AND REPORTERS: A copy of Emerging Trends in Real Estate® Asia Pacific 2013 is available for download.
About the Urban Land Institute
The Urban Land Institute (www.uli.org) is a global nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has nearly 30,000 members representing all aspects of land use and development disciplines.
About PwC
PwC helps organizations and individuals create the value they're looking for. We're a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.