28 APR 2018
The most attractive cities in Asia Pacific for development and investment are Sydney and Melbourne, according to the latest edition of Emerging Trends in Real Estate, published by the Urban Land Institute and PwC.
The report polled 710 real estate developers, fund managers, lenders and institutional investors on their intentions for the year ahead. For 2018, Sydney and Melbourne rank first and second in terms of city investment prospects, thanks to their perceived stability with respondents. This marks a shift in sentiment from last year, when risky markets such as Bangalore drew the most attention.
Sydney also ranks first in terms of development prospects, with Melbourne third. Splitting the pair to take second place is Hồ Chí Minh City in Vietnam. These three are the only cities in the region where development prospects are adjudged “generally good” for the year ahead. For investment, those polled also envision good conditions in Singapore, Shanghai and, again, Hồ Chí Minh City.
Investors have essentially split into two camps. In the first are risk-averse institutional investors fleeing near-zero returns on sovereign bonds, which find Australia’s relatively high yields and stable economy attractive.
Then there are investors buying into emerging nations such as Vietnam. “We go in with a long-term perspective about being part of this stellar demographic cycle,” one fund manager said, explaining that he is looking for capital appreciation while enjoying a 4-5% yield. “There is retail consumption, office demand, IT demand and domestic demand that hasn’t come out yet."