The gradual rollout of 5G networks across Asia Pacific is expected to have a significant impact on real estate in the near future, according to a report published jointly by consultant firm PWC and Urban Land Institute in November 2019. PERE spoke to Graeme Torre, managing director and head of private real estate, Asia Pacific at Dutch pension fund manager APG Asset Management, to find out how technology will dominate the fundraising space for Asia-Pacific next year.
PERE: What single biggest theme do you think will dominate the institutional fundraising space in 2020?
Graeme Torre: There are a number of things that we are looking at, but if you want me to name one, I would say anything that incorporates a greater degree of technology and if that idea could incorporate an ESG bias – even better. Besides the obvious real estate choices within the technology theme, I also think proptech as a standalone sector is going to receive greater emphasis from the investors. However, it is difficult at present to put a meaningful amount of money to work in that area.
PERE: Why is technology becoming more important for real estate investment?
GT: Every aspect of our society and economy has been affected by technology and in many respects real estate is a laggard when it comes to technological advances. Any advances in technology are important for real estate because they can range from improvements in construction methodology, asset operations through to portfolio management with each element capable of having a significant effect on returns. Technology is also playing a major role in improving environmental in real estate.
PERE: What is the most obvious real estate choice within the technology theme in Asia and why? Any examples of APG’s investments?
GT: With the generation of so much data in our everyday lives and the likelihood for that to increase exponentially with the advances in sectors like artificial intelligence and 5G, data centers appear to be a logical point of overlap between the real estate sector and technology. While most of the data is transmitted in the ether, it has to be stored somewhere when it’s not being used. Real estate facilities are the obvious providers of such storage, even though the environmental footprint of a data center can be significant. And the closer they can be provided to the users the better. Our best performing data center assets are all close to city centers in Asia.
PERE: Why is it challenging for investors to invest in proptech?
GT: Like all institutional investors we have to invest at a certain scale and the majority of the proptech offerings these days are relatively small. We are however looking at proptech investing to make sure we are among the first to identify any new innovations in the real estate sector. The intention would be to then to incubate the best ideas and utilize those in our own portfolios and processes.