Regional Spotlight: Why Asia Pacific Now?RegionalSpotlight:WhyAsiaPacificNow?

Changing The Narrative

Several key factors give us conviction that Asia Pacific real estate markets are approaching a turning point:

• Looser monetary conditions. As a capital-intensive industry, a reduction in borrowing costs via lower interest rates is set to ease the strain on investors.
• Historical precedent. In real terms, values have started to turn a corner – the magnitude and timing are consistent with past cycles and point to a return to growth this year.
• The repricing is nearly done. Based on our modeling, most of the effect of past interest rate increases has now been factored in. Current yields are already very close to our target acquisition range.
• Low supply, solid occupier markets. While slower growth and recession are features in parts of the world, occupier strains have been limited largely due to ongoing jobs growth resilience and low development activity. Rental growth continues to hold up, supporting values as yield shift slows. With productivity-driven growth set to remain a key feature of major Asian cities going forward, rental growth might yet prove stronger than expected.
• Significant within-region diversification benefits. The divergence in performance across the major regional markets will continue and in turn offer attractive pan-regional city-sector benefits from portfolio diversification.