The two-way street for property - report from MIPIM 2012, Cannes
03 April 2012 18:35
Property and capital have become routes down a two-way street between Asia and the rest of the world. Money is still flowing into Asia to purchase real estate, but Asian investors are also buying property in Europe and North America.
That Asia is both a source and a destination for investment was a prime message at MIPIM 2012, the real estate event held in Cannes from 6 to 9 March.
With 19,400 participants from 83 countries, attendance rose by 4.2% compared to 2011.
The conference, which was a showcase for more than 40 Asian companies, including those from Hong Kong, the Chinese mainland, Japan, Singapore, India and South Korea, looked at traditional and new Asian markets.
The event's organiser also stressed the increasing importance of MIPIM Asia, which will take place in Hong Kong from 7 to 9 November.
March 6 was Asia day, with several main events centred on the region. The Asia-themed programme featured conference sessions and networking events, focusing on East-West connections and opportunities for growth.
MIPIM Director Filippo Rean said MIPIM Asia was a key to international investment in the challenging world economic situation.
"The first day of MIPIM is Asia day, to make MIPIM Hong Kong more visible," Rean told a press conference.
While MIPIM Asia was essentially launched as a platform to invest in Asia, it is also becoming a place for Westerners to travel to Asia to raise capital, with increasing opportunities for European and US cities to attract capital as well.
Hub of choice
|Watt: Hong Kong's role to expand.|
At a conference entitled "Asia: a Business Hub of Choice", Moderator Courtney Fingar, Editor of fDi Magazine, a unit of the UK's Pearson Group, said: "any company that wants to be global must have an Asian strategy and presence. Asia is both a source and a destination for investment."
Speaker David Watt, International Director at real estate services company DTZ Asia (Hong-Kong), noted strong demand from US and European retailers.
"China is the mass market, but Southeast Asia is a big target as well," Watt said, citing boutiques, filling stations and fast-food chains as examples of the types of businesses the region attracts.
Businesses and shops in demand are not all top brands, he noted, adding that the mid-priced market was hot.
Hong Kong's role could develop further for Chinese mainland companies, Watt said. There will be many more opportunities for Hong Kong as Mainland firms develop, mature and become more outward looking.
Looking at new markets in Asia, Watt saw opportunities in Myanmar (formerly Burma), but cautions that the government must decide how it will approach opening the country.
The Myanmese hospitality industry will have "great opportunities" over the next five years, he predicted, with hotel brands especially entering that market.
Initially, that would be the main development in the long-isolated Southeast Asian country.
"There seems to be a reasonable amount of wealth, a growing middle class and educated people there," Watt said.
The future of investment in Myanmar interested a number of delegates, who questioned whether it was safe to enter the country as it begins to open up to business.
The consensus seemed to be that the opportunities were there, as were risks and challenges.
|Mitchell expects rise of Asian pension funds.|
Peter Mitchell, Chief Executive Officer of the Asia Pacific Real Estate Association (APREA), a non-profit organisation to promote Asian real estate, said that the Asian region has become a major source of capital.
Mitchell noted the advent of Asian pension funds, as a source of capital, spreading its wings across the globe. "This is just the beginning," he said. "Asian pension funds are starting to discover real estate," he explained. "Big pension funds are the trail blazers with strategies to increase allocations to real estate."
However, impediments include a lack of information and understanding of how real estate works, and what people should invest in first.
"There are signs that US institutional investors are tooling up to get back into Asia," Mitchell observed. However, domestic Asian investors will continue to dominate the scene.
"The markets that appeal to most are [the Chinese mainland], Hong Kong, Singapore, Australia and Seoul, to an extent," he said. "There are also high-risk, high-return places such as Indonesia. We get a lot of questions about Indonesia."
Kumar Tharmalingam, CEO of Malaysia Property Incorporated (MPI), added that after the financial crises, there was a shift to the Asian region. "Pension funds are looking more and more to Asia," he said. "They are setting up offices in Singapore, Hong Kong and other areas. They are looking for places with security and a legal framework."
Japanese and South Korean fashion brands are also interested in the rest of Asia, especially the mid-priced market, Tharmalingam added.
China market gets ahead
|Investment diversification under way.|
A later session, "China: investment diversification", noted that the country's GDP will continue to drive global growth. The government's legislation to curtail residential property prices should not discourage international investors, the panel heard.
Moderator John Stinson, Managing Director of real estate broker Cushman & Wakefield (Singapore) noted the major urbanisation of the country. By 2025, China will have more than 200 cities with a population of more than 1 million and will offer 200 major residential, 200 major retail and 10 major office markets.
Yue Tang, a real estate, Corporate, Mergers and Acquisitions partner in the Beijing office of the Mainland full service law firm Jun He Law Offices outlined some trends in land usage in China.
The government is increasingly protecting agricultural land, increasing land supply for low-income housing and cracking down on land speculators, she said.
The government is encouraging low income housing, increasing land supply and investment by central and local administrations.
Frank Khoo, Global Head of Asia at AXA Real Estate, the property arm of the giant insurance group, oversees all investment and asset management activities in the Asia Pacific. He noted that foreign developers are working more with local companies.
"The Chinese will start to look outside China," Khoo added. "They are buying in gateway cities in Europe, to diversify as the Rmb strengthens."
At a later interview, Khoo said that there was increasing interest in capital to Asia.
|Khoo expects Chinese investment in gateway cities.||Landmark East for Hong Kong.|
Khoo explained: "investors are going to seek higher returns and to diversify. Asia does not have the structural problems of the US and Europe."
Frankfurt-based Choy-Soon Chua, a Managing Director at SEB Investment GmbH, the open-ended German real estate fund, is responsible for global investments. He said: "if you want to invest in Asia, you cannot ignore China."
At the special Asian press conference, Justin Chiu, Executive Director with Hong Kong's property developer Cheung Kong Holdings Limited, said that over the past few years the Asian market had changed.
"There has been a lot of effort by governments in some Asian countries to discourage speculation," he said. Property prices are still rising as a lot of investors are still interested in Asia, and considerable capital is moving from Asia to the European and American markets.
|European-bound funds from Asia.|
Hong Kong, Singaporean and Chinese mainland money is especially interested in the UK property market. "There is foreign money invested in Asia and Asian money invested in Europe," he said. "Capital is going both ways."
Panelist Francis Li, Vice Chairman for Greater China with DTZ (Hong Kong) said Asian currencies were strong. "Investors are looking for commercial properties as well as private residential," he said. "Big cities attract interest. More Asian money has gone to Europe for two or three years."
Aside from the generally upbeat mood, there was good news for Hong Kong in the awards ceremony. Architect Aedas Limited and rail and property developerMTR Corporation Limited won the award for the Best Futura Mega Project for the Express Rail Link West Kowloon Terminus in Hong Kong.
from special correspondent Garry Marchant, Cannes