STRONG REAL ESTATE FUNDAMENTALS SEEN FOR ASIA IN 2014, SAYS EMERGING TRENDS IN REAL ESTATE® ASIA PACIFIC 2014; JAPAN REGAINS STATUS AS A MAGNET FOR INVESTMENT AND DEVELOPMENT
Survey from ULI, PwC Ranks Tokyo, Shanghai and Jakarta as Top Real Estate Investment Markets
TOKYO (December 13, 2013) – Japan has regained its number one status as a magnet for real estate investment and development , due in large part to the government’s ambitious economic stimulus plan, according to Emerging Trends in Real Estate® Asia Pacific 2014, a real estate forecast jointly published by the Urban Land Institute (ULI) and PwC.
The report ranks Tokyo as the top market in the Asia Pacific region for investment and second for development over the next 12 months. In addition to Tokyo, other cities in Japan, including Osaka, Fukuoka and Sapporo, are gaining appeal among investors, notes the report. The positive outlook for Japan, it says, is reflected in a surge of properties purchases in anticipation of rapidly rising prices.
Emerging Trends, which is being released today in Tokyo, provides an outlook on Asia Pacific real estate investment and development trends, real estate finance and capital markets, and trends by property sector and metropolitan area. It is based on the opinions of more than 250 internationally renowned real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants.
“I strongly believe that the recovery is here and it is real,” said ULI Japan Executive Committee Member Fred Uruma, president and chief executive officer of Touchstone Capital Securities, Co., Ltd. in Tokyo. “The yield expectation may presently exceed reality, but the rental market has truly hit bottom, and a smooth recovery is well on its way at the asset level. However, this time around, the market will be one for those who truly understand the fundamental breakdown of the real estate market in Japan.”
For the Asia Pacific region as a whole, Emerging Trends predicts that real estate fundamentals will remain strong in markets throughout Asia in 2014, with stiff competition for conventional assets in prime markets boosting the popularity of niche property sectors and secondary markets for investments. The report points out that, unlike other asset classes, real estate in Asia “barely flinched” this year in response to the tapering of the U.S. economic stimulus and expectations of higher interest rates. This is due, in part, because of the increase in sovereign wealth and institutional capital being directed to Asian markets, as well as the substantial volume of Asian capital being exported from China, Singapore and South Korea into real estate assets across the region. Japan, it notes, is one of the largest beneficiaries of capital flows from other regions within Asia.
The Tokyo comeback is no surprise to Japanese real estate investors. Hiroshi Takagi, PwC Japan Tax Partner, a leading advisor to J-REITs and international funds, noted that there has already been a significant increase in transactions and prices are going up. Global funds in particular are increasing investment in Japan as they see little downside risk due to the low interest rate environment and optimism about the economy.
Outside of Japan, the survey found continuing interest in assets located in Asia’s emerging markets, including Jakarta and Manila. The reason, says Emerging Trends, is that as “cap rate compression continues to squeeze returns, and with higher interest rates seemingly just around the corner, investors are drifting to markets that can provide the kind of returns they are unable to tap elsewhere.”
Top Investment Markets for 2014
Investment Prospects by Property Type
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About the Urban Land Institute
The Urban Land Institute (www.uli.org) is a global nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has more than 30,000 members representing all aspects of land use and development disciplines.
PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 184,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
About PwC Japan
PwC Japan (PricewaterhouseCoopers Japan) represents PricewaterhouseCoopers Aarata, PricewaterhouseCoopers Kyoto, PricewaterhouseCoopers Co., Ltd., Zeirishi-Hojin PricewaterhouseCoopers and their subsidiaries. Each entity is a member firm of the PricewaterhouseCoopers global network in Japan, or their designated subsidiary, operating as a separate legal entity.