Asian institutional investors appear poised to take advantage of growing opportunities in the resurgent U.S. real estate market – and if they aren’t, they probably should, industry experts said. asian investors.
Todd Henderson, DWS
“Despite many Asian investors being overinvested in real estate or waiting for valuations that reflect the current cost of capital, they still have a strong interest in the sector.” said Todd Henderson, global co-head and chief executive officer of the division. A person in charge of real estate for the Americas at asset management company DWS said this. asian investors He said this in an interview in Singapore.
“They are now starting to become very aggressive in underwriting funds with the idea that they will be in a position to invest later this year or take advantage of what we believe to be pretty good in 2024.” It’s a vintage year for me. ”
Chris Pilgrim, managing director of Asia Pacific global capital markets at real estate services firm Colliers, echoed this view, noting that the United States is home to the world’s most liquid real estate market, even in volatile times. did. Pilgrim added that the Federal Reserve’s series of rate hikes over the past 18 months have impacted U.S. real estate valuations and attracted “significant capital from the Asia-Pacific region.”
Chris Pilgrim, Colliers
“From an Asia-Pacific perspective, investors are just waiting for the right moment. [to boost allocations to US real estate],” he said asian investors.
“There is much more interest in terms of products coming to market and investors starting to look for products and put money into them. , reflecting the fact that there is a consensus that things are largely calming down. The US is one of the fastest to reprice markets, meaning it will be one of the first markets to start seeing capital again. do.”
new money
Indraneel Khalekar, global head of real estate research and portfolio strategy at Principal Asset Management, also said Asian institutional investors are gearing up for new allocations to U.S. real estate. Fed moves toward end of monetary tightening policy.
Indraneil Kallekar
major
“Investors in Asia will continue to be very market cycle focused, so I think we’ll see them re-enter real estate stocks over the next two to three years,” he said. asian investors.
“Investors who are invested will increase their allocation and those who are not will increase their allocation to the US,” Khalekar added.
“There are certainly bargain-hunting opportunities,” said David Cassman, senior manager research analyst at Morningstar Research Services. Most people think there is still room for upside.”
david cassman
Lucifer
All four sources said geographic and demographic factors are making institutional investors prefer to invest in the country’s southern, southwest and Mountain West regions. However, while the overall picture improved, certain sectors and themes were particularly bright.
beds, medicines, storage
“This really follows a ‘bed, medicine, storage’ approach,” Pilgrim says. “We’re seeing much more capital being pumped into the lifestyle and logistics sectors, and when I say ‘pharmaceuticals,’ I see that as growth in the life sciences sector. This is much more of an asset class-centric theme than the new office assets and trophy office assets that we were looking at pre-pandemic or even a few years before that. ”
“We are very much in the industrial and residential camp, and so are our investors,” Henderson said. “The industrial sector is attractive because of the acceleration of e-commerce as a result of COVID-19. But , what COVID-19 has introduced is the idea of supply chain security. We used to talk about just-in-time inventory, now we’re talking about just-in-case inventory. We’re seeing an increase in warehousing because we can’t afford not to, which results in more storage. We’re also seeing onshoring that benefits the industrial warehousing base, and these are very investable. ”
Both Pilgrim and Carlekar said the logistics sector is becoming increasingly sophisticated, a trend that investors in Asia could take advantage of.
“The logistics industry is increasingly adopting micro-use classes,” says Pilgrim.
“Last mile logistics, for example, wasn’t really discussed many years ago. Cold storage is becoming even more relevant and is certainly gaining traction among investors from Asia Pacific. Masu.”
Henderson said demand for both industrial and residential real estate is increasing, creating opportunities for Asian investors. His three factors that have made these sectors attractive are declining supply and low vacancy rates, falling prices, and the fact that U.S. interest rates appear to have peaked.
supply squeeze
“There is a housing shortage of millions in the United States,” Henderson said.
“The supply pipeline in both residential and industrial is really down, down 30-40%. When you combine this with strong fundamentals and low vacancy rates, we see very strong rental growth going forward.” This is a scenario in which we can expect growth in net operating income.”
Pilgrim said investors could be positioned to take advantage of rental growth in the multifamily and student housing sectors, which are seeing significant capital inflows from the Asia-Pacific region.
Karlekar added, “Now we’re not just seeing multifamily housing, we’re also seeing more single-family rental homes, or built homes. There’s a wealth of housing opportunities emerging in the United States.”
Cassman agreed, explaining that single-family REITs are primarily a U.S. phenomenon.
“There are some REITs that own single-family rental properties, and that’s helped by high interest rates, because high interest rates make it harder for people to buy homes,” he said.
“They’re more likely to rent, but they still want a house or a bigger room than an apartment. That’s why U.S. REITs are doing pretty well.”
Henderson said Asian investors have historically been quick to redeploy money when it comes to finding such opportunities in U.S. real estate.
“They tend to be a little ahead of the curve in terms of recognizing market opportunities…and after a few cycles, Asian investors came back early. Why I’m in Asia now And that’s because Asian investors are becoming very interested in the U.S. real estate sector again,” Henderson said.
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