Japan is the top choice in the Asia Pacific region for global investors who want to put money into the property sector, according to a survey conducted by the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV).
More than two-thirds of 142 institutional investors covered in the survey picked Japan as the No.1 choice for property investment. Australia comes in the second place, followed by Greater China and Singapore.
“Yields have compressed in the US and UK… In the next year or so, from the UBS perspective, we feel that there is continuous opportunity in Australia and Japan, particularly in office sector and industrial sector, said Graham Mackie, who sits on the management board and executive board of ANREV and is responsible for investment in Asia Pacific real estate funds in UBS.
The average yield in Australia is between 6 and 7 percent, while it is about 4 percent in Hong Kong, said Simon Mallinson, executive managing director at Real Capital Analytics.
A lot of international capital, such as Canadian and German money, has been flowing to Australia because of the yield differentials compared with their own domestic markets, Mallinson said.
In Asia Pacific, more than 90 percent of investors prefer to invest in office buildings, while retail spaces have been their top option in the past two years. Retail spaces slid to the second place this year, with the segment favored by three quarters of the respondents. Two-third of the investors chose the industrial and logistics sector.
The top three country and sector combinations are Japan office, Australian office and China retail space.
Globally, the office sector has risen to the first place from the third, underlining a “back to basic” strategy among investors, the study shows.
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