Young professionals with an appetite for affordable housing in big cities are fuelling activity in Greater China’s rental-residential market, according to experts who joined the latest instalment of MTD TV’s Asia Multi-Family Forum.
For Wednesday’s one-hour session, which was sponsored by Yardi, Mingtiandi founder Michael Cole welcomed Charles Ma, Greystar’s managing director for China investment; Sachin Doshi, founder and CEO of Weave Living; Eric Pang, head of capital markets for China at JLL; and Keith Chan, CEO of China rental apartment operator Funlive.
Representing one of the world’s biggest apartment developers, Ma said policy support from the government is alleviating some of the unknowns and supporting the development in Greater China of what has been one of the world’s most dependable asset classes in recent decades.
“Stability from an investor’s perspective is so important,” he said. “Rental housing over the past 30 years as an institutional sector has proven itself to be probably one of the best risk-adjusted return sectors.”
Big and Rich
JLL’s Pang zeroed in on the demographic tailwind boosting China’s multi-family prospects as fresh graduates with white-collar skill sets seek housing.
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- Charles Ma, Managing Director, China Investment, Greystar
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- Eric Pang, Head of Capital Markets, China, JLL
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- Sachin Doshi, Founder & Group CEO, Weave Living
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- Keith Chan, CEO, Funlive
“They are probably the largest group of affluent young population in the world,” he said, adding that most come from single-child families and have a more urban lifestyle than those in generations past. “That will be the fundamental driver and the sentiment for the sector.”
In Hong Kong, the world’s priciest housing market, Warburg Pincus-backed Weave Living is offering what Doshi calls a “service-driven solution” to contrast with the hands-off landlords of the past.
Today’s tenants expect on-call maintenance and a degree of certainty in the institutional landlord that they’re dealing with, he said: “No one wants to spend their entire weekend finding an air-conditioner mechanic or finding a housekeeper. Looking at rental accommodation as a service is something that really appeals to the user.”
Bright Days to Come
Looking ahead, Funlive’s Chan expects the institutionalisation process to continue over the next few years for China’s multi-family sector, which he likened to the UK’s housing situation five years ago. Many developers back then were starting rental-residential projects in Britain, and those portfolios have begun to reach the market.
“For China, we are now trying to build up these kinds of assets, and hopefully this will turn into a big one in the coming years,” Chan said.
Investors will continue to invest in traditional mainstays such as office, Chan said, but more institutions will also be adding rental apartments to their portfolios. The former banker predicts that within three or four years time the multi-family sector will be “better than the logistics sector today”.
You can watch the full discussion above.
Japan Up Next
MTD TV’s Asia Multi-Family Forum continues with Japan as the focus of a panel discussion on Tuesday 18 May. That session will feature Ed Boyd, Greystar’s senior managing director for Asia Pacific; Ken Sakuramoto, head of equity advisory for Japan at JLL; Rushabh Desai, CEO for Asia Pacific at Allianz Real Estate; and Joel Rothstein, shareholder and chair of the Asia real estate practice at Greenberg Traurig.
On Tuesday 25 May, the Multi-Family Forum will conclude with a panel on emerging rental residential classes in Asia Pacific. In that session, Jyoti Ramchandani, a managing director at SC Capital overseeing the private equity firm’s Score+ strategy, will join Shusaku Watanabe, head of Japan real estate for Nuveen, along with two other speakers to explore opportunities in high-yielding market segments like student housing, co-living and senior living.
Multi bigger than logistics? That would not happen. At least not for another 10 years.