Asian cities, not countries, key to real estate growth and diversification

The world’s economic weight continues to lean favourably towards Asia-Pacific. From just 28 per cent in the early 2000s, the region’s share of world output, in purchasing power parity terms, now stands at 39 per cent, and is projected to reach 44 per cent by 2025. Thus, many continue to consider Asia-Pacific to be replete with untapped investment potential.

Against this backdrop, Asia-Pacific’s social, political and economic landscape is being strongly influenced by megatrends – rising middle classes, ageing populations, urbanisation, technology and the above mentioned shift of economic power from the West – that are equally apparent in the physical development and the built environment of its key population centres.

Indeed, we see common threads running through some of the most prominent and resilient Asia-Pacific cities of today and tomorrow. Many are exceptionally safe and clean, have excellent infrastructure and are home to highly educated workforces that will serve as drivers of global growth in the coming decades.

Although Asia is ageing, the median ages of many Asia-Pacific economies are much lower than in the West, providing strong tailwinds to productivity, growth and consumption. Structural reforms to labour markets and immigration also have the potential to support the longer-term demographic attractiveness of many Asia-Pacific economies in the coming decades.

While it could be argued that a rising tide will raise all boats, we believe that global investors looking for well-rounded and sustainable real estate investment opportunities in Asia-Pacific should focus their attention on catalysts for return at the city – rather than the country – level.