Finding right assets, the ‘real’ challenge for investors
Posted Date : 31-Oct-2007
Mumbai has entered the Top 10 list of most promising Asia Pacific cities for real estate investments in the annual investor survey released by PricewaterhouseCoopers.
The country’s financial capital has jumped to 10th place in 2008 from 17th in 2007 in the investment prospect ranking while New Delhi and Bangalore retained their inclusion in the Top 20 Asian cities, according to annual investor survey titled ‘Emerging Trends in Real Estate Asia Pacific 2008’, released by PricewaterhouseCoopers and the Washington-based Urban Land Institute.
While India has been on investors’ radar for several years, it had proven inaccessible due to government restrictions, which were eased in 2005 to permit foreign investments, primarily through the construction-development route, he added.
Singapore is “certainly one of the markets in the area that provides a very stable legal and tax environment, and property rights that are beyond question. And it therefore is certainly one of the markets where many, especially Westerners, are very comfortable,” says one survey respondent.
Like Singapore, Tokyo was cited as presenting very low overall risk as an investment market. Characterised by survey respondents as a city with a tight inventory supply and low vacancy rates, Tokyo is a market that is starting to draw more institutional money, in addition to the opportunistic funds that have been invested over the past five years, the report says.
The Asia Pacific cities included in Emerging Trends fall into different categories, based on each market’s investment and development prospects, and on respondents’ opinions about buying, holding or selling specific property types within each market. In the first category are the top 20 investment cities – with Shanghai, Singapore and Tokyo as the top three.
In the strong development markets segment, Ho Chi Minh City topped the list followed by Shanghai, Singapore, Bangalore and Mumbai.
In terms of favoured property types, the hotel sector is ranked highest in terms of investment prospects in Asia Pacific cities, with demand driven by both business travel and rising tourism. In this sector, Ho Chi Minh City was listed as the top Asia Pacific city followed by Bangalore, Shanghai, Mumbai and New Delhi.
The second favoured property type for investment is the office sector, characterised as fiercely competitive. Ho Chi Minh City was again listed as the top market followed by Mumbai, Tokyo, Bangalore and New Delhi.
The residential for-sale and apartment residential rental sectors ranked fifth and sixth, respectively, for investment opportunities; however, based solely on development prospects, the residential for-sale sector ranked first of any property type. The most promising markets for apartment rental investments are Ho Chi Minh City, Mumbai, Bangalore and Guangzhou, the report said.
“Urbanisation in Asia Pacific property markets is a self-fulfilling economic factor for the supply and demand for residential space,” the report said.
With greater urbanisation, and consequently a higher demand for residential property, what is considered critical for sustaining the apartment sector is an understanding of the current and future trends of apartment or residential segmentation, such as low-income, middle-income, or luxury residential.
“As the years go by, Asia Pacific property markets will integrate more fully with the global economy, and, just as importantly, global property capital markets,” the report adds. “If the quality and quantity of research, business intelligence, and transparency improve, then the atypical puzzles and learning curves of the marketplace will be replaced with maturity.”
The report provides an outlook on Asia Pacific real estate investment and development trends, real estate finance and capital markets, trends by property sector and metropolitan area, and other real estate issues pertinent to the countries in Asia. About 20 markets were included in the report. It is the second Asia Pacific edition of the highly regarded annual Emerging Trends in Real Estate investor survey.
Based on the opinions of internationally renowned real estate professionals, Emerging Trends’ Asia Pacific version reflects interviews with and surveys of more than 190 professionals, including investors, developers, property company representatives, lenders, brokers and consultants.
According to the report, the Asia Pacific property market is still as diverse today as it was a year ago, in terms of opportunities, risks, capital markets, economics, demographics and business cycles. The fact that more businesses understand and recognise the diversity and variations is seen as a step towards market maturity.
