ASIA - Partners Group has identified a wide range of investment opportunities in the real estate markets of Asia-Pacific, which it claims institutional investors should be looking to capitalise on.
The Swiss-based private markets specialist said that the region was not receiving its proportional allocation from investors despite it contributing approximately a third to global domestic product (GDP) and growing at more twice the pace of the US and Europe.
In its latest research report, Partners Group has highlighted distinct areas of opportunity it sees in the developed markets of Japan, Korea, Singapore, Hong Kong and Australia, and the emerging economies of India, China and Vietnam.
Distressed sales in Japan are expected to create opportunities to buy stable assets at attractive prices, although Partners Group warned that the full economic repercussions of the recent earthquake were yet to be determined, with lower occupancy for hotel rooms, retail and office space a possibility in the short term.
The secondary market in Korea is described as an "attractive instrument to access commercial properties at discounts to intrinsic value", although Partners Group warns that it is a market dominated by domestic institutions.
The investment manager has also identified value-add opportunities in Singapore and Hong Kong by looking at aged and undermanaged buildings.
The principal opportunities in Australia are through recapitalisations and mezzanine finance, due to withdrawal of global banks and more conservative lending practices by local institutions, the report said.
India was highlighted as one of the more attractive emerging markets in Asia, particularly in middle income residential developments.
Partners Group said investment risks in India could be mitigated substantially through structured transactions and by partnering with local operators.
Residential opportunities were also identified in China and Vietnam, particularly in second tier cities in the former.
"We expect volumes and prices for residential properties to fall over the next 12 months as the [Chinese] government is determined to make housing more affordable," the report said.
"Partners Group believes this will present another compelling entry opportunity in a market that has very strong fundamentals over the long term."