Build to Core Key to Achieving China Real Estate Returns Says LaSalle

One of the region’s biggest gatherings of real estate investors kicked off in Singapore on Wednesday with an examination of how China’s rapidly evolving economy has influenced capital flows into real estate in 2016.

Speaking at the Real Estate Investment World (REIW) event, Elysia Tse, Head of Research & Strategy in Asia Pacific for LaSalle Investment Management, spoke on the impact of China’s changing economy on property investment in the region.

Tse, who covers the APAC region for the US-based real estate investment firm, predicted changes within China’s domestic real estate industry, as well as changes in the way mainland firms invest in property internationally.

Domestically in China, Tse, who covered Asia for BlackRock, Aviva and JP Morgan Asset Management before joining LaSalle last month, was positive about the potential returns for real estate investors ready to work within China’s unique market conditions.

“For Chinese investment, you always have to look at their policy,” the Cornell-educated economist recommended. “The 13^th five-year plan says that the Chinese government wants to focus on the financial sector, they want to focus on pharmaceutical, and they want to focus on new and renewable energy.” Tse sees the emphasis on these fast-growing sectors as positive for real estate demand.

Build to Core is the Key to China Value

Taking advantage of these trends is not always easy, however, in a market flooded with domestic investors and lacking in high quality assets. “In China you need to build to core,” Tse recommended.

“Over the long term, there is a substantial amount of domestic capital in China seeking for incoming producing assets, in particular insurance companies,” Tse went on to explain to Mingtiandi.  Given the limited universe of true core assets in the market, Tse indicated that LaSalle sees opportunities to build or develop core-level assets which produce steady cash flows and could also afford resale opportunities.

In addition to Tse, who delivered the keynote for the 300 person event, a range of investment heavyweights took the stage to share their market outlooks at the 10^th anniversary of the annual event.

Immediately following Tse’s keynote, Stephen Tross of Holland’s Bouwinvest; Catherine Hong, of Morgan Stanley Alternative Investment Partners; Charlene Huang, a director with UBS Global Asset Management; Andy Tan of Generali Real Estate Asia and Bart Coenraads of Aviva Investors gathered to discuss how global economic uncertainty is affecting the outlook on Asia Pacific real estate investment from investors in Europe and the US.

Mingtiandi Joins China Investment Session

Also during yesterday’s program, Mingtiandi’s Michael Cole, joined Beng Tiong Ng of ARA Asset Management, Hei Ming Cheng Kai Long Real Estate Investment, and Tom Delatour of Century Bridge Capital to discuss the outlook for investment in Chinese real estate.

Other industry leaders appearing at the two-day conference included representatives of BlackRock, Blackstone, Invesco, Morgan Stanley and UBS, among other regional and international investment firms.

The conference, which is being held at the Grand Hyatt Hotel in Singapore, continues on Thursday, with a full day of sessions starting with presentations by former ING Real Estate executive Peter Crowhurst, and EIU chief economist Simon Baptist.