Asia Pacific real estate continues to offer compelling diversification opportunities for global institutional investors despite rising geopolitical tensions and concerns over higher interest rates, senior executives from two Canadian pension giants said Tuesday at the Mingtiandi Singapore Forum.
Speaking in a joint interview session at the event, Alessandro Fiascaris, head of Asia Pacific at Oxford Properties, and George Agethen, managing director for real estate across Asia Pacific and Latin America at La Caisse, said investors remain constructive on the region even as the Middle East conflict threatens to disrupt capital markets and delay expected interest rate cuts.
Fiascaris said Oxford expects the geopolitical turmoil to weigh on investor sentiment and transaction activity in the second half of the year, particularly if concerns over inflation and monetary tightening persist.
“This year is going to be a little slower and a little more challenging than people expect,” he said at the Yardi-sponsored event.
Weighing Rate Expectations
Fiascaris noted that investor caution appears driven more by fears surrounding interest rates than by expectations of severe economic damage from the conflict itself.
Alessandro Fisascaris and George Agethen with Mingtiandi’s Michael Cole at the forum (Image: Mingtiandi)
“I think the fear that interest rates are going to be on an upward pressure … is making investors a little cautious,” he said.
Agethen said La Caisse continues to view Asia Pacific favourably because of its strong underlying fundamentals and growing role as a portfolio diversifier for global investors.
“The reasons to invest in Asia or in APAC, I think, have increased rather than decreased,” he said.
Montreal-based La Caisse, which oversees C$520 billion ($380 billion) in assets, currently allocates around 10 percent of its capital to Asia across sectors including logistics, retail, living, hospitality and listed REITs. Oxford Properties, the real estate arm of Ontario pension fund OMERS, also has roughly 10 percent of its global portfolio in Asia Pacific.
Selective Core Strategies
Both executives said institutional investors remain interested in core real estate opportunities in markets like Australia, Japan and Singapore, though the definition of “core” has narrowed significantly compared with previous cycles.
“There is core capital, it’s probably not as abundant as it used to be,” Fiascaris said. “Now it’s a lot more selective.”
The Oxford executive said investors are concentrating on prime assets in gateway cities rather than applying blanket allocations across sectors or geographies.
“Prime office are core, prime logistics are core, great residential assets are core in the right geography, not everything,” he said.
Agethen said La Caisse has increasingly prioritised stable income streams over higher-risk development strategies as construction costs remain elevated globally.
“We have chased income rather than, say, core as a definition,” he said.
Over the past year, La Caisse has invested in Australian retail, Japanese logistics and living assets, hotels across the region and selected office opportunities while also increasing exposure to listed markets. Oxford has meanwhile continued expanding in Australia across office, residential and industrial strategies, including backing Hale Capital’s $532 million infill logistics vehicle.
Fundraising Pressure
The executives also acknowledged that slower asset disposals and weaker returns over the past several years have made limited partners more selective when backing new Asia Pacific real estate funds.
“If it was an existing partner or existing fund manager, I think the first filter that we’ve developed is how have you treated us through the issues of the previous funds,” Agethen said.
The La Caisse executive said the pension manager continues investing in pan-Asian strategies but has become increasingly focused on specialist operators and aligned partnerships rather than broad regional mandates.
“We try to capture that opportunity rather than let the structure dictate our opportunity set,” he said.
Fiascaris said institutional sentiment towards real estate is beginning to improve after several difficult years as property values stabilise and recovery signs emerge across key markets.
“We are feeling that we’re at the early stage of the recovery,” he said.
Agethen added that volatile periods often create the best opportunities for long-term investors able to remain disciplined through market disruptions.
“This is the period where you distinguish yourself,” he said.
India and Data Centres
Both investors pointed to India as one of the region’s most compelling long-term growth stories despite governance challenges and concerns among some foreign investors about execution risks.
Oxford continues targeting income-producing commercial assets in India, where Fiascaris said office and retail properties can generate sustained rental growth over long holding periods.
“There is a reason why in India you generally have to have a certain scale to succeed,” he said.
The executive said India’s office market remains supported by structural demand from multinational occupiers and technology groups, dismissing concerns that artificial intelligence could materially undermine leasing demand in the near term.
“India is probably at the forefront of AI adoption and AI design,” Fiascaris said.
Agethen said La Caisse has also remained active in digital infrastructure investments, including the pension giant’s A$1 billion ($700 million) investment in subordinated perpetual notes issued by Australian data centre operator NextDC earlier this year.
He said the group currently allocates 60 to 70 percent of its global data centre exposure through credit investments to reduce technology and operational risks.
“But for sure, from a credit perspective, you’re mitigating some of those risks that maybe we don’t understand well enough today, but we kind of fear,” Agethen said.
An Interview in Pictures
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