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Asian investors stay tuned into safe havens

By WU YIYAO in Shanghai | China Daily | Updated: 2017-05-09 07:32
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A saleswoman at a real estate show in Zhengzhou, Henan province. XINHUA

Despite policy uncertainties, Asian investors regard real estate as safe haven assets-amid global low-interest-rate conditions, analysts said.

According to research by Zillow, the online US residential property portal, job opportunities and education resources are among the top priorities for Asian investors when choosing a destination for investment, as they believe these are factors supporting long-term yields.

Although policy uncertainties remain in US market, demand for real estate assets, particularly residential property, remains because investors mainly secure yields from stable cash flow from rental income, which has been rising steadily in key cities.

In the UK's key cities, such as London, mature markets are seeing slowing growth in yields, in a plateau-like situation in which yields remain high and go up slowly for mainstream segments.

In segments which are more capital-driven, there will be more volatility, said Yolande Barnes, head of Savills World Research, a real estate services provider.

Some cities with infrastructure that is attractive to young technology professionals, such as Tel Aviv and Dublin, are getting increasingly competitive because they attract people to move to there-a change in trends in global urban development, Barnes said.

China's key cities remain attractive to investors, and their business models have been shifting from mainly "develop-to-let" to "develop-to-lease", with an eye on long-term, stable cash flow, analysts said.

Urban renovation projects, such as turning idle factories and hotels into offices, are one of the most popular models among investors who wish to generate stable income when new land supplies are limited.

"More investors regard real estate assets in key cities as safe haven assets," said a research note from CITIC Securities.

"Investors are also further diversifying their investments-while they keep investing in mature markets with stable, single digit yields at around 4 and 5 percent, they will also seek new opportunities in emerging markets, such as smaller cities with fast-growing populations."

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