In this session, experienced fund managers shared with us investment opportunities in the Asia Pacific region. The theme is what types of asset and location are preferred by these investors, given the current economic environment. Currently, low-interest rate and low-yield alternative investments mean that there is a lot of capital waiting to be deployed in the real estate market. There is a high level of pressure for the fund managers to deploy capital in the real estate market space; however, with economic uncertainties, the majority agree that it is hard to seek profitable deals.
There are different views among investors with regards to the investment strategies in this region. Colliers shared with us that, given the low-yield environment many investors are satisfied with core/core-plus investments with total return of 8%-9%. With bond rate on the rise, he expects to see more risk being taken going into 2017. In this environment where profitable deals are relatively hard to spot, Colliers’ strategies with regards to the asset type is to “keep an open mind”. On the other hand, SCCP is focusing on asset-liability management as a source of both income producing and risk protection. The fund’s strategy is to look at major underlying trends and economic fundamentals because “once you hit the right trail, you are in”. David Brenac, Dep. CEO and head of real estate of Hoi An South Development, shared with us his insight into the Vietnamese market. There is high growth potential in the residential and hospitality sectors due to the demand trend from Vietnam’s younger generations.
One common thing can be inferred. The economic uncertainties, coupled with multiple disruptive forces, have created a challenging environment for real estate investment. When asked to summarize the investment strategy in one sentence, SCCP has the solution, “Pet Hotels”.