BNP Paribas AM: Diverse opportunities in Asia’s listed real estate

Urbanisation and population growth are driving the increasingly attractive Asia Pacific real estate sector. But with opportunities come risks.
  • Half the additional urban population growth in the world by 2050 will be in Asia
  • The most liquid and transparent markets are in Singapore, Hong Kong, Japan and Australia
  • Valuations are attractive and looser monetary policy should prove supportive

Asia Pacific offers opportunities of scale and growth for real estate investors, but investors need to understand that there are complexities involving transparency and liquidity. The region is home to around 60% of the world’s population as well as the largest, fastest-growing commercial real estate markets. Growth in the commercial sector has been driven by a dynamic economy, but it has also benefited from improving transparency and liquidity, with the industry becoming more professional and evolving to be more suitable for institutional investors.

The region’s main developed markets – Australia, Hong Kong, Japan and Singapore – have taken the biggest steps to introduce functioning Real Estate Investment Trust (REIT) regimes that bring practical benefits to investors. Although most investors in listed real estate focus on the larger, more liquid equity markets, increasingly, companies domiciled in those markets are investing across the region.

The structural drivers of demand are strong

A number of factors are driving demand from within the region and from international investors, with population growth and urbanisation among the most prominent. Asia’s population is forecast to grow at more than 100 000 people a day, according to the UN’s Population Projections 2017, which is expected to drive rapid urbanisation. Indeed, Tokyo is already the world’s largest city with 37 million inhabitants, defying Japan’s overall negative population growth. The UN predicts that around two-thirds of the world’s population will live in cities by the middle of the century, up from the current 50%, with nearly half the growth in Asia.

Read more about the opportunities offered by the fast-growing, increasingly attractive Asia Pacific real estate market – as well as an expert view of the potential risks.