Asia Pacific Listed Real Estate: A Contextual Performance Analysis

Abstract

This paper seeks to provide a better understanding of the performance of listed Asia Pacific real estate, the factors which determine this performance and current and potential roles and applications within portfolio management. Throughout this paper we focus primarily on the Asia Pacific region, that is Asia plus Australia and New Zealand. On occasions, however, for specific reasons we have narrowed the definition to Asia, which will not include Australia and New Zealand. The starting premise of our analysis is as follows: • Asia Pacific listed real estate markets are diverse and present differing levels of maturity • The overall expanding capital markets across the region are providing the depth and liquidity necessary to support increased investor interest in the region • REITs, long established in Australia, have been introduced into other markets in the region and provide another capital option • Market capitalisation of Asian REITs (ex-Australia and New Zealand) now exceeds US$100 billion but REITs represent a minor proportion of the real estate universe • Studies and surveys such as APREA’s The Significance of Real Estate in Asian Pension Funds have highlighted impediments to investing in real estate in Asia, including unfamiliarity with the asset class and lack of information • Global institutional investors tend to view Asian real estate as higher risk and therefore require an appropriate “risk/reward” solutio