Members of industry remain firmly upbeat about the prospects for Asian real estate markets in the new year.
A new research report indicates that real estate markets in Asia are set to enjoy a healthy performance in 2014 on the back of keen competition for regular assets in key areas.
According to the report jointly issued by the Urban Land Institute (ULI) and PwC, entitled Emerging Trends in Real Estate Asia Pacific 2014, the robust outlook for Asian property markets next year builds upon on a strong performance this year, during which real estate in the region “barely flinched” despite the adverse impact on other asset classes of waning economic stimulus in the US and concerns over interest rate hikes.
The report surveyed the opinions of over 250 prominent members of the real estate sector, including developers, consultants, lenders, brokers and property company representatives.
According Raymond Chow, ULI North Asia chairman, higher prices and reduced yields for core products have failed to diminish the enthusiasm of investors, leading to an increased focus on niche property categories such as senior care and logistics.
Investors are searching for fresh opportunities in emerging markets, particularly in Southeast Asian mega-cities such as Jakarta and Manila, which promise greater returns that can compensate for cap rate compression and higher interest rates.
Among developed economies, Japan has made a surprise re-emergence as the leading market for investment and development, returning to the top of the rankings for the first time in five years.
Despite the prolonged doldrums endured by the Japaneses economy, the report says the country remains a key destination for capital flows hailing from other parts of the Asia-Pacific, with its near-term prospects enhanced by the massive monetary stimulus program launched by Prime Minister Shinzo Abe.
OECD real estate markets are also set to benefit from strong appetites of in Asia for property, with unprecedented levels of capital flowing toward the West from various investor types, including sovereign wealth funds, institutional investors, insurance companies and private purchasers.