Comment: Why invest in Asian real estate?

Asian countries are fostering stronger integration as well as trade ties amongst one another at a time when Europe is dealing with uncertainties surrounding the EU and a breakaway of one of its key trading partner, the UK, according to Kiran Patel, global chief investment officer, Savills Investment Management.

In this feature below Patel, pictured below left, asks the questions ‘Why invest in Asian real estate?’

As Asia braces for further economic progress with China at the helm, Asian countries are set to benefit from these strengthened partnerships, making it an appropriate time to consider investing in the Asia-Pacific region.

It is difficult to think of another part of the world that provides the diversity of investment opportunities available in the Asia-Pacific region.

The continent consists of many different countries from developed nations like Australia, Hong Kong, Japan, South Korea and Singapore to emerging markets like China, the world’s second-largest economy (thrice the size of the German economy or four times that of UK).

Frontier markets
It can also offer exposure to frontier markets such as Indonesia and Philippines with a population of 261m and 103m respectively; a combination that is greater than the populations of either Western Europe or the US.

Asia is moving into an era of unprecedented urbanization. For instance, in just 30 years, nearly 500 million people will have moved from rural areas into China’s 622 main cities, and a predominantly rural country will have become nearly 60% urbanised. It is expected that around 58% of the world’s population or 4.6 billion people will live in urban areas by 2025, up from 3.9 billion currently.

Cities will hold the future of economic growth. For instance, even though Japan’s population has been declining since 2012, Tokyo continues to record strong population growth thanks to internal migration2. With more than 80% of global GDP generated in cities, urbanization can contribute to sustainable growth if managed well by increasing productivity, allowing innovation and new ideas to emerge.

Mega regions
In many places, cities will merge together to create urban settlements on a scale never seen before. These new configurations will take the form of mega-regions, urban corridors and city-regions. For example, it is estimated that Japan’s Tokyo Nagoya-Osaka- Kyoto-Kobe mega-region will have a population of 60 million by 2025.

The city region of Bangkok in Thailand will expand another 200 kilometres from its current centre by 2020. (1/3)

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