- European investors most bullish on growing allocations in Asia Pacific
- Diversification and access to new markets are key drivers
- Structural shift towards residential sector
Institutional investors plan to maintain their allocations for real estate globally, according to the 2023 Investment Intentions Survey published by ANREV, INREV and PREA. Of note, investors in Asia Pacific indicate an expectation of raising real estate allocations. The survey findings were presented at an executive briefing featuring a panel of capital markets experts and hosted by ANREV and Cushman & Wakefield in Shanghai on February 8, 2023.
While 2022 was a challenging year for commercial real estate investment in Asia Pacific, there have been a number of encouraging signs since the beginning of 2023, including a more rapid reopening of China, slowing inflation rates in some countries, and recovering stock market performances. Findings from the 2023 survey reflect this returning confidence, with over half of the survey respondents indicating an expectation to increase their allocations to Asia Pacific real estate over the next two years. Since the survey was undertaken in the later stages of 2022, this represents a confidence boost to the region, even before the encouraging signals now emerging. By region, European investors demonstrated the greatest interest in Asia Pacific, with more than 60% expecting to expand their allocations in the region. Diversifications and ability to access new markets and specific sectors are among the top investment reasons for European investors.
Amélie Delaunay, Director of Research & Professional Standards, ANREV, said: “The 2023 Investment Intentions Survey is reflecting institutional investor's reaction to the global economic and geopolitical turmoil. The denominator effect is affecting investors in their allocation, but it is reassuring to see that still 88% of them are expecting to deploy capital in 2023. ESG considerations, including environmentally and/ or socially responsible investments and net zero carbon commitments, are now well-established considerations when investing in the Asia Pacific region."
In addition, the survey reveals that the residential sector is the most preferred real estate asset class in Asia Pacific, with 83% of respondents indicating they will invest in the sector in 2023. The resilience of the residential sector through the pandemic has boosted the sector’s appeal to investors. However, industrial/logistics and office assets have remained attractive to investors, with 76% and 72% respectively indicating their interest in investing in the two sectors. Furthermore, nearly half of the respondents showed a preference for core strategies for investments in 2023, the highest level since 2014.
Gordon Marsden, Head of Capital Markets, Asia Pacific at Cushman & Wakefield, commented: “Momentum will build as we move through 2023. True, it will take some time for the benefits of the China opening to flow through, but it will. If we draw parallels from the opening of India, it took three months to really start to see the pick-up in activity starting with the occupational activity, as a precursor to capital markets activity.”
Catherine Chen, Head of Capital Markets Research, Asia Pacific at Cushman & Wakefield, added: “The Asia Pacific economy has proven to be strongly resilient, with most markets in the region registering positive GDP growth despite the global economic turmoil of 2022. Capital markets did slow in the second half of 2022, but we expect investment activity to pick up this year given record levels of ‘dry powder’ currently in the market and strong investor interest in increasing their Asia Pacific allocations. In addition, China’s faster pace of reopening and more supportive financial policies for developers will benefit the China property market as well as the wider Asia Pacific region.”
About The Survey
This year’s survey attracted responses from 82 participants globally of which 75 are institutional investors, and seven are funds-of-funds managers, from 21 countries. The survey’s coverage has reached more than US$888 billion of assets under management in real estate.
INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, was launched in May 2003 as a forum for institutional investors and other participants in the growing non-listed real estate vehicles sector. The association represents and reflects an industry with a total value of €2.8 trillion and INREV members deliver €385 billion of stimulus to the real economy of Europe. INREV has 467 members which include 113 of the largest institutional investors as well as 40 of the 50 largest real estate fund managers, plus banks and advisors across Europe and elsewhere. The non-profit association is focused on increasing the transparency and accessibility of non-listed vehicles, promoting professionalism and best practice, and sharing knowledge. It is based in Amsterdam, the Netherlands. http://www.inrev.org
Founded in 1979, the Pension Real Estate Association (PREA) is a non-profit trade association for the global institutional real estate investment industry. PREA currently lists over 700 corporate member firms across the United States, Canada, Europe and Asia. Our members include public and corporate pension funds, endowments, foundations, Taft-Hartley funds, insurance companies, investment advisory firms, REITs, developers, real estate operating companies and industry service providers. http://www.prea.org
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms in the world, with approximately 50,000 employees in over 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2021, the firm had revenue of $9.4 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit www.cushmanwakefield.com
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