Market Round Up
How does a real estate investor achieve success in Asia? We know success is measured by returns, be that an IRR or equity multiple returns achieved on capital. For some investors who have invested into less transparent markets prior to the GFC, success may mean an exit from their position and a partial capital return. However, the question is more about how investors have achieved their success. Some would argue that timing their entry to market was the key. In some cases that has been true, it could have been through excellent foresight, but more likely it was with a little bit of luck.
For most investors, whatever the conditions a market has presented them with, the partner they have chosen has been critical to their success. The partnership could be a fund investor with a fund, a fund manager with a local operator or a developer with another developer, but not one investor can be an expert in every market. In good times or bad, choosing the right partner is critical to an investor’s success. In good times, the partner has helped choose the right investment at the right time and then executed the strategy well. In bad times, a good partner hasn’t given up or walked away from the problem. They have rolled up their sleeves, communicated any issues and provided solutions at the right time. This is part of the reason that some groups have been able to raise capital in the last 12–18 months, whilst others haven’t. No one was perfect prior to the GFC, nor could they predict the effect it would have, but those companies who dealt with the situation well are now being rewarded by their capital partners.
In pure real estate terminology, buying land at the right price or timing the cycles in an occupier market may be reasons for success. However, the one thing I hear continuously from investors is that the choice of partner is the key. As I said previously, investors are looking to invest in different ways depending on the market they wish to operate in, whether they look for funds in India, joint ventures in China or to buy debt in Japan. Whatever the case, they look for best-in-class operators in their chosen markets and specialists who will be well aligned to the investor and their strategy. The capital markets in Asia are constantly evolving. One thing that doesn’t change though is the fact we need to serve our capital partners in an open, respectful and transparent way – in good times or bad.
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