GLOBAL - Asian real estate is offering opportunities for better relative returns than markets in the US and Europe, according to a report by the Asia Pacific Real Estate Association (APREA).
Graeme Newell, a professor at the University of Western Sydney and author of the report, said: "The opportunities for growth are here in Asia, and if they want to enhance returns and diversification, it's a good market to pick up.
"Asia is not just about the opportunistic space -there are quality products available."
Asia currently accounts for more than 23% of the global real estate markets and is expected to increase to 34% by 2020, driven in part by accelerating economic growth in the region's emerging markets, Newell said.
Lim Swe Guan, chairman of APREA's board of directors, told IPE sister publication IPA that China was still the focus.
He added: "Japan is also, because of the cyclical state of the market, where prices are quite depressed, so you can get very good competitive yields. And Singapore is quite a fair bit, because of the growth opportunities."
Both real estate investment trusts and unlisted real estate in Asia have key roles in providing exposure to high-quality real estate portfolios in the region, offering both liquidity and diversification, Newell said.
Asian listed and unlisted real estate have delivered important risk-adjusted returns in the post-global financial crisis environment, according to APREA's report.
REITs in Asia now account for $100bn (€72bn) in market cap, or 12% of the global REIT market.
There are REIT markets in seven Asian countries, with significant and high-quality real estate portfolios.
"In most cases, they're giving higher risk-adjusted returns," Newell said. "In terms of a market segment that's responded positively relative to their local stock markets, the REIT markets in Asia overall have done incredibly well since the global financial crisis."
Unlisted real estate funds in Asia have also grown significantly since 2004, driven by the strong economic growth in the region and the search for higher returns by investors.
APREA cites the availability of core, value-add and opportunistic funds with country-specific, pan-Asia and global real estate fund mandates, as well as the increased use of separate accounts and club deals by larger institutional investors.
These unlisted real estate funds in Asia will be further supported by new institutional investors seeking exposure to Asian real estate in their portfolios in both the developed and emerging markets, Newell said.