ASIA-PACIFIC REAL ESTATE INVESTMENT SURVEY 2011

ASIA-PACIFIC REAL ESTATE INVESTMENT SURVEY 2011 In April 2011, our Real Estate team surveyed a select group of international investors about their attitudes towards investment in the Asia-Pacific. Despite recent speculation that the strength of the Australian dollar could dampen interest in the region, the survey found that the Asia-Pacific is still in demand as an investment destination. Well over half of the respondents - who came predominantly from Europe and the US and collectively manage real estate portfolios valued at almost US$100 billion - intend to invest in the Asia-Pacific region in the future. The majority intend to do so in the next 12 months, providing a clear indication of the current strength of investor interest in the region and the desire to pursue available opportunities in the short term. This is likely to lead to increasing competition for assets coming to market, and consequently further recovery in capitalisation rates. Respondents generally feel that economic conditions in the Asia-Pacific are favourable. Over 70% rate the outlook for the Asia-Pacific region outside Australia as ‘bullish’. When considering Australia alone, over half rate prospects as bullish. 02 | Asia-Pacific Investment Survey 2011 GeoGrAPhICAl SPreAd Crucially, investors from Europe and the US appear to be interested in investing right across the region (see Figure 1). While China is the most popular destination for future investment, with over half of the respondents rating it as a preferred market for investment opportunities, there is also a remarkable spread of interest amongst other countries, with Singapore, Australia, India, Hong Kong, Korea and Japan all considered attractive destinations for foreign investment. Investors are demonstrating an increasing sophistication and more diverse outlook, showing willingness to consider a broad range of locations to pursue their regional investment strategies for the Asia-Pacific, rather than restricting themselves to one or two mainstream economies. Additionally, investors appear to be willing to look beyond the risks associated with investment in China, as the high returns on offer can support that risk. TyPeS oF InveSTmenTS While geographical interest may be widespread, investors appear to be focused on specific types of assets. The survey discovered a clear preference for premium commercial property assets - with almost all respondents indicating they would consider them for investment opportunities. Retail assets also rate highly with nearly two-thirds of respondents (see Figure 2). Similarly, respondents favour some investment methods over others. In the current post-GFC market, there is a very clear preference for direct property investment, either individually or with a local joint venture partner (see Figure 3). These results reflect the current market experience, where joint venture interests in premium-grade assets are increasingly being offered in order to provide continuity of management by a local partner with the access to capital of an international investor. This shows a continuing move away from indirect, wholesale-style investment funds, which lack the degree of control that joint venture arrangements provide to each co-owner. Overall, the Asia-Pacific region continues to be a primary focus of investment for many European and US property investors. The region is diverse and offers many opportunities for investors, both geographically and by property sector. Figure 1 Which geographical markets within Asia-Pacific represent the best investment opportunities for your business over the next three years? 29.4% AUSTrAlIA 52.9% ChInA 23.5% honG KonG 29.4% IndIA 23.5% JAPAn 23.5% KoreA 35.3% SInGAPore Figure 2 Which types of investments would you consider? 87.5% CommerCIAl (PremIUm) 25% CommerCIAl (oTher) 18.8% IndUSTrIAl 62.5% reTAIl 25% reSIdenTIAl 18.8% AGed CAre/reTIremenT lIvInG 6.3% hoSPITAlITy/ToUrISm Figure 3 Which methods of investment would you consider? 87.5% dIreCT 18.8% IndIreCT 62.5% JoInT venTUre WITh A loCAl PArTner Note: respondents could select more than one answer www.dlapiper.com | 03 ABouT DLA PIPER REAL ESTATE Whatever part real estate plays in your strategy, DLA Piper lawyers can work with you to design commercial and innovative legal solutions that deliver value at all stages of the development and investment cycles. We operate as a single team throughout Australia, working seamlessly with our funds, finance, tax and construction teams to provide you with a genuinely integrated one stop shop for property transactions. our team is also part of one of the largest real estate teams in the world: a single unit, cutting across borders and simplifying projects. We provide sophisticated legal services with the highest degree of technical skill and experience. Each of our lawyers is committed to the DLA Piper philosophy of ‘everything matters’ so that you receive a consistently high standard of personal service and quality advice, wherever you use us. In short, we are one team with no borders providing a real advantage to you in Australia and beyond. more InFormATIon Contact your nearest DLA Piper office: BrISBAne Level 28, Waterfront Place 1 Eagle Street Brisbane QLD 4000 T +61 7 3246 4000 F +61 7 3229 4077 brisbane@dlapiper.com CAnBerrA Level 3, 55 Wentworth Avenue Kingston ACT 2604 T +61 2 6201 8787 F +61 2 6230 7848 canberra@dlapiper.com melBoUrne Level 21, 140 William Street Melbourne VIC 3000 T +61 3 9274 5000 F +61 3 9274 5111 melbourne@dlapiper.com PerTh Level 31, Central Park 152-158 St Georges Terrace Perth WA 6000 T +61 8 6467 6000 F +61 8 6467 6001 perth@dlapiper.com Sydney Level 38, 201 Elizabeth Street Sydney NSW 2000 T +61 2 9286 8000 F +61 2 9283 4144 sydney@dlapiper.com www.dlapiper.com DLA Piper is a global law firm operating through various separate and distinct legal entities. For further information, please refer to www.dlapiper.com Copyright © 2011 DLA Piper. All rights reserved. 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