Market round up
I have always enjoyed watching horse racing since a very young age. I am not a gambler – I gain more satisfaction from picking a winner, especially an underdog who defies the odds. As an Australian there is no bigger race than the Melbourne Cup run on the first Tuesday of November every year. My first Melbourne Cup memory was Kiwi’s win in 1983. He was an outsider for the race and spent most of the 3,200 m at the back of the field. He was a real stayer’s horse and was the second last with 500 m left on the track. But then he came out from the clouds and ended up winning by a length.
In real estate capital terms, Japanese investors are my Kiwi. No one believed that they could be a dominant investor in the global real estate markets again but they are wrong. In the past six months, we have seen a shift in mentality of the Japanese from focusing on their home market to a more outward looking attitude. This is great for our region’s markets as the Japanese have huge amounts of capital and are long term investors. Although looking to invest in some of the more developed markets such as Singapore and Australia, an even more focused attitude towards investing in emerging markets such as the Philippines, Indonesia, India and Vietnam are quite evident. They are investing in high growth markets for the long term. This spells great news for local developers and investors especially those markets that suffered due to global investor’s elusive attitude in recent years.
So, just when we thought Japanese investors were happy to jog along with conservative investment from the comforts of their homes, they are now leading the market as investors in our high growth, emerging markets. For 2012, they are my Kiwi.
On a different subject, we look forward to launching our new Asia Pacific secondary trading platform (see related article below). Watch this space.
Finally, I can’t resist making some predictions for 2012 real estate finance markets:
- The capital raising environment will be similar to 2011 – patchy. We believe that niche, mid-cap, country focused and sector focused funds will successfully rise this year. As people often say, 50 million is the new 100 million cheque and 20 million is the new 50 million cheque which means it is difficult to raise large amounts of capital for commingled funds.
- Co-investment/Separate Account Mandates will remain popular for the larger investors this year. These structures provide them with more control over their investment.
- Emerging markets such as Vietnam and Indonesia will be increasingly sought after by investors. Problem is the quality of product that is available is limited. That will begin to change this year however.
- Australia will still be a popular destination for capital, but will that shift from core assets to value add opportunities or even debt? We believe so.