UK investors looking to increase allocation to real estate in Asia Pacific region, Aviva Investors survey says
16 November 2010
(London): A recent survey of 110 UK investors* conducted by Aviva Investors has revealed that almost 60 per cent of investors are looking to increase their real estate allocation to the Asia Pacific region in the next three years.
The survey was conducted at the annual Aviva Investors Real Estate Con¬ference in London held earlier this month, which featured speakers from across the Aviva Investors Real Estate and Real Estate Multi-Manager teams in the UK, Germany, Singapore and the US.
The results showed that a staggering 74 per cent of investors are likely to invest outside their domestic market over the next three years. Asia Pacific was by far perceived as the most compelling investment opportunity, with only 20 per cent looking to increase their exposure to UK real estate and a smaller number looking to do so in Europe (10 per cent) and the United States (11 per cent). Half of those surveyed indicated that their investment strategy will be a mixture of listed and unlisted real estate.
The positive prospects for the region have been echoed by the Aviva Investors Real Estate teams, who believe that Asia is showing signs of a strong recovery and has become one of the most attractive international real estate markets for long-term investors, driven by five fundamental and cyclical factors:
1. Consensus economic forecasts have suggested that Asian [GDP] growth will reach 6.3% in 2010, far exceeding Western Europe’s estimated growth of 1.1% and North America’s of 3.3%. This quicker-than-expected recovery in the broader economy means that real estate values should follow suit with meaningful improvements.
2. Recruiter Hudson Asia recently reported that hiring expectations have risen in key Asian cities. Whilst prime rents for offices and industrial assets remain far from their 2007 peaks, today’s market represents an interesting entry point and increased hiring should boost rental growth.
3. The long-term outlook for retail and residential property is strong as increasing wealth and urbanisation is expected to lead to stronger consumption. In addition, a number of markets are developing as global financial centres, which benefits the office sector.
4. With the Asian population becoming wealthier and aspirational attitudes beginning to change, there has been a rise in the number of Asian consumers and a liberalisation of consumer credit. As Asian consumers put their savings to work, there should be very tangible benefits to real estate investments.
5. The investible universe for real estate in Asia is low relative to other regions, with JP Morgan suggesting it could grow at almost twice the pace of Europe and North America between 2009 and 2028. This presents a significant opportunity to participate in the development and funding of institutional grade real estate, and to access a growing universe of investment properties.
Ian Hally, Chief Executive, Asia Pacific Real Estate, explained:
“Real estate is a key asset class for long-term investors, but questions have been asked recently about whether there is any value left following this year’s rally in the UK. As a result, many investors have started looking east beyond their home borders.
“Asian economies look to be much better placed for recovery than their Western counterparts, making real estate investments in the region particularly compelling, which has been less reliant on debt over the past decade at a government, corporate and personal level. This should lead to stronger investor and occupier demand.
“In our opinion, experienced and long-term real estate investors have an excellent opportunity to achieve strong risk-adjusted returns within the region.”
- Ends –
* The audience surveyed included UK institutional investors, pensions consultants, wealth managers and IFAs.
For more information contact:
Wendy Svirakova / Kaidee Sibborn
+44 (0)20 7809 8810
Notes to Editors
This document is for investment professionals only. It is not to be viewed by or used with retail clients. Unless stated otherwise any opinions expressed are those of Aviva Investors Global Services Limited (Aviva Investors). They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature.
Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 14 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of almost £249 billion at 30 June 2010.
- Aviva is the world’s sixth largest1 insurance group, serving 53 million customers across Europe, North America and Asia Pacific
- Aviva’s principal business activities are long-term savings, fund management and general insurance, with worldwide total sales2 of £45.1 billion and funds under management of £379 billion at 31 December 2009
1 Based on gross worldwide premiums at 31 December 2009
2 Based on 2009 published life and pensions PVNBP on an MCEV basis, total investment sales and general insurance and health net written premiums, including share of associates’ premiums
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