The finale of MTD TV’s Asia Value-Add Forum 2021 brought together a quartet of experts for a wide-ranging discussion about achieving value from less-loved properties in core markets around the region.
Guests from Cushman & Wakefield, JLL, ARA Private Funds and AEW joined Mingtiandi founder Michael Cole on Monday morning for the one-hour live event, touching on topics like proptech innovation, risk management and the role of sustainability and green financing in value-add plays.
Gordon Marsden, regional director of capital markets at Cushman & Wakefield, characterised Asia Pacific investors as having an overexposure to core assets and a strong appetite to participate in the value-add arena as a way to boost returns.
“Some of the target investors for the value-add arena may well be fund-to-funds and also insurance companies, who are generally seeking that slightly lower risk band than those pursuing more opportunistic strategies,” Marsden said.
Andrew Macpherson, head of asset development for APAC at JLL, said his agency has detected a significant uptick in value-add activity, based on indicators like due diligence and feasibility studies.
While acknowledging that investors in the sector are taking more of a chance than those who stick to core strategies, his team’s sees opportunities to “de-risk” value-add investment and limit downside through analysis of key value drivers.
“We’ve heard value-add being described as an art and a science,” Macpherson said. “I guess we’re trying to make it more of a science by leveraging on data and de-risking that whole process.”
He observed that the business case for the deployment of proptech tools is becoming more solid, a point picked up by Jason Lee, who serves as managing director, chief investment officer and senior portfolio manager for APAC at AEW.
“There are definitely a lot more building systems, control and monitoring systems, linked to technology,” Lee said. He cited facial recognition scanners and disinfectant UV lighting in air ducts as evidence of the maturing role of proptech in the office sector.
The mainstreaming of tech innovation in refitting properties also comes with the prospect of improved sustainability and a reduced carbon footprint. Lee was quick to note that about 97 percent of the gross floor area in AEW’s Asia portfolio has some sort of green certification.
Sustainability is also helping to provide new financing channels, as attested to by Stephen Tang, who heads value-add and opportunistic real estate for Asia PacificGreen at ARA Private Funds. Tang’s firm was able to secure green financing for both the purchase and asset enhancement aspects of the former Manulife Centre in Singapore’s Bras Basah area, Tang said. The property, rechristened 5One Central, has attracted high-profile tech tenants like Lazada and its parent company, Alibaba.
“Some of the items we’re installing are CO2 monitoring systems in the lobby areas, so they monitor the air and when it starts to be a certain level, fresh air starts coming in,” Tang said. “We’ve got sensors in the common areas where once it detects that there’s not many people, it starts dimming the lights in the building.”
Such refinements not only earn points for environmental certification, but they ultimately flow down to the bottom line on the expense side as well, he said.
You can watch the full panel discussion above.
Allianz, Greystar to Join Multi-Family Forum
With the value-add forum done and dusted, MTD TV will be back on 29 April with the first session in our multi-family forum, which will explore investments in build-to-rent properties in Japan, mainland China and other markets around the region.
The multi-family series will feature speakers from Allianz Real Estate, Warburg Pincus, Greystar, JLL, Altus Software and SC Capital, with more thought leaders to be announced soon.
Details for the multi-family series are available here, and just reach out to our team if you would like to learn more.