Salient to Investors:

Joseph Pacini at BlackRock said:

  • Asian institutions’ appetite for regional real estate investments has returned as they hunt for yield for their growing assets amid low interest rates and are expected to deploy more money and a bigger percentage of their property allocations to Asia, especially in commercial real estate.
  • Asian real estate has surprisingly not been part of the equation for a number of years, but now it is returning.
  • In a low interest-rate environment there is more need for yield, creating stress for Asia because it has a lot of capital to invest.
  • The bulk of new real estate investment will continue to focus in a few cities in developed markets in North America and Europe because of their size.
  • Investors will buy the ugliest building in the best block, and by improving create value.
  • Asian institutions tend to have slightly higher return expectations than western counterparts because of faster economic growth and inflation in their region.

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