ASIA NEWS: Call for Change

The annual PERE Asia Summit was held over two days in Hong Kong in early March. Now in its eighth year, the conference was attended by close to 400 delegates from 21 countries, with some of the world’s leading real estate professionals gathering together to deconstruct the Asian property market. 

With economic uncertainty and subdued demand stalling growth in thriving property markets such as China and Japan, the panellists discussed how the investment thesis was changing for these markets. At the same time, there was also talk about investment picking up pace in some emerging Asian economies, buoyed by changing demographics and in some instances, new pro-growth governments in places like Indonesia and India.

An intentions survey conducted by CBRE, which was released during the conference, suggested that 43 percent of investors are willing to invest in core real estate in the region. But with the gradual emergence of a parity between the returns generated in Asia, and those in the US and European markets, speakers cautioned that investors would need to reassess their expectations for the region. Indeed, in a panel on core opportunities, Benett Theseira, Pramerica Real Estate Investors’ new head of Asia, said that investors would now find it harder to demand a risk premium while investing in core real estate in Asia. His view was echoed by co-panellist Suchad Chiaranussati, the managing director of SC Capital Partners, who was voted by the audience as the top speaker at PERE Asia 2015.

On China, there was a mix of views. Goodwin Gaw, the chairman of the Hong Kong-based firm Gaw Capital Partners, who was also chairing the conference, gave a striking opening address in which he told delegates that China’s ‘golden days’ were probably over. More specifically, he said, over was the long-held practice of using Guanxi or relationships, to get lucrative deals done in the country, thanks largely to the ongoing anti-corruption crackdown by the Chinese government. However, that was cited as a factor dissuading investors from deploying capital in the country. John Pattar, who leads CLSA’s private real estate investment business, said in a panel that investors would prefer to hold through the current period in China for at least twelve months more. CBRE’s Nick Crockett, however, said that the country, despite its uncertainty, remains the number one destination for making investments in Asia Pacific.

Dr Seek Ngee Huat, chairman of Singapore-based Global Logistic Properties, was interviewed onstage by PERE’s senior editor, Jonathan Brasse, on his pioneering work with Singapore state fund GIC Private and his visions for new company Global Logistic Properties.

Elsewhere on the bill, sessions on investing in niche markets, and in secondaries real estate, were newly chosen for this year’s event. That the US and Europe have more active secondaries real estate markets is well-known, but speakers suggested that Asia will begin to see an increase in secondaries real estate volumes , especially as some of the pre-2008 funds struggle to execute deals. 

Another first this time was the quiz conducted on the opening day of the conference, which saw CBRE’s Nick Crockett, CLSA’s John Pattar and Laurasia Capital Management’s chairman, Robert Zulkoski battle it out to answer questions on some of the most-read stories to have appeared on over the last decade. Crockett, who could barely keep his hands off the buzzer, won by a high margin.