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Thread: Could Asia be losing its shine

  1. #1
    Join Date
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    Default Could Asia be losing its shine

    http://www.propertyguru.com.sg/prope...sing-its-shine

    For the first time since the turn of the century, economic fortunes in the West and East have reversed, and Asian property investments are finally losing some of its glitter and shine.

    This view comes from Pacific Star Group’s recent 2014 Asian Property Outlook and Strategy (APOS) report, where the investment house notes how the composition of global growth has shifted from emerging economies to developed economies with stronger recovery momentum. Investors have also flocked to developed countries that offer attractive entry points

    Pacific Star Group views the reversal of growth prospects and investment activity is a natural progression as Asia comes of age. The Group expects sustainable growth in Asia to be driven by economic integration, urbanisation and rising incomes.

    Commenting on the report Lam Chern Woon, Pacific Star’s Vice President of Research and Strategic Planning, said: “We see little reason to alter our positive long-term prognosis of Asian real estate markets.

    “After an extended period of stellar growth, Asia has entered a consolidation phase in the near term. It is thus paramount to identify the growth opportunities before the markets pick up. Investors should actively lock themselves onto Asia’s long term growth potential while keeping an active lookout for opportunities that are in line with the trends playing out.”

    Pacific Star recommends a core satellite investment approach where core investments will track the region’s medium term growth prospects, while well-executed opportunistic investments will help bolster risk-adjusted returns.

    Asia may no longer be an investment green field, according to the company, but pockets of opportunities remain. In particular, the senior and youth population are rising in dominance. Opportunities in both segments are largely untapped and successful first movers will unlock a new paradigm of real estate investment in Asia.

    The report highlighted that the greying demographics in the region could see a greater number of retirement communities being developed to cater to this segment’s rising affluence and desire for an independent and active lifestyle. Such communities have been well received in the U.S. and Europe and the success could be replicated in Asia Pacific countries, where the concept is still relatively new.

    Youths in the new era are different from previous generations given rising affluence, educational standards and exposure to globalization and technology. Retailers should adopt a careful mix of online marketing strategies, and focus on designer and new-to-market brands to engage this segment.

    Developers can meet the desire for convenience, differentiation and experience by providing innovative mixed-use developments while keeping the quantum affordable.

    Using its Property Drivers Framework, which seeks to establish the attractiveness of real estate sectors across Asia by scoring them along various macroeconomic and real estate indicators. Pacific Star’s top recommendations for strategic investments include:

    Quality office assets in Hong Kong, Singapore and Tokyo
    Besides having strong institutions, these markets are undergoing a cyclical recovery and face limited new supply in the near term.

    Retail assets in Hong Kong, Singapore and Kuala Lumpur
    International retailers will be more selective and favour established retail destinations like Hong Kong and Singapore. Kuala Lumpur, on the other hand, should benefit from continued retail interest in view of its positive demographics and resilient domestic spending. The retail pipeline in China is large, but mismanaged assets in good locations present great repositioning opportunities.

    Residential markets in Tokyo, Singapore and Hong Kong
    In the residential sector, Tokyo’s housing market is past the worst and new opportunities could surface in Singapore and Hong Kong, given strong latent demand. Mass housing development remains as a viable play given the wave of urbanization across cities.

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