Asian region strategic for investors: Pacific Star

In its “2013 Asian Property Outlook and Strategy” report, Pacific Star takes the view that the global outlook is brightening, as Europe’s sovereign-debt situation stabilises and economic conditions pick up in the United States and China. Asia’s prospects are anchored by China’s recent economic revival and buoyant growth is expected in the Southeast Asian economies that are coming of age and attracting higher levels of investments.

Lam Chern Woon, vice president of research and strategic planning, said yesterday that the company favoured the fast-growing economies of Southeast Asia given their healthy domestic demand and the region’s progression towards the Asean Economic Community. High-yield investments are still predominantly found in Southeast Asia and although the region is subject to a fair degree of political winds, the income-risk trade-off is certainly improving.

 

Next phase  

The next phase of tourism growth in Asia will be propelled by the development of upscale casino resorts to join the ranks of Macau and Singapore, where gaming revenues have surpassed expectations. Multibillion-US-dollar integrated resorts are being planned in South Korea and the Philippines, as well as in Vietnam and Cambodia on a smaller scale. In Japan and Taiwan, casinos could be legalised in the near future.

As China ascends the economic value ladder, the shifting production model will present interesting options in quality industrial/logistics sectors in inland China, Thailand and Vietnam. Pacific Star favours integrated industrial/logistics facilities with high adaptability to an evolving production chain and the greater adoption of e-commerce retail.

Last year was a tipping point for Iskandar Malaysia, which saw cumulative committed investments of 106 billion ringgit (Bt1 trillion), surpassing the 100-billion-ringgit target set at its inception in 2006. Government-backed companies and major investors have committed to Iskandar, and investments will likely roll in at a faster pace this year. Its strategic proximity to Singapore, strong bilateral governmental support and active participation of established developers will come together to define its success.

“Given these developments, we think that it is now opportune for investors to cast the net wider beyond traditional markets and sectors, while riding on Asia’s growth story,” Lam said. “There are opportunities for investors to complement their portfolio, especially in new markets like Iskandar Malaysia, Jakarta and Manila. 

“Investors should also continue to keep an eye on quality assets in the gateway markets of Hong Kong and Singapore, where pricing may be contained in the near term due to the rental correction.” 

Pacific Star favours the commercial sector in Asia over the residential sector, which has seen repeated cooling measures and minimal pricing growth. Valuations for prime commercial properties are getting richer, but the possibility of a hefty price correction is limited given the continent’s robust growth outlook. Valuations are also supported by capital inflows and the limited supply of institutional-grade assets for sale.

For the office sector, the markets of Hong Kong and Singapore are favoured for their sound political fundamentals and business competitiveness. 

Bangkok’s office market is benefiting from strong economic momentum and positive demand supply dynamics.