THURSDAY, March 28, 2024
nationthailand

Credit Suisse considers investments in Asia-Pacific property market

Credit Suisse considers investments in Asia-Pacific property market

Credit Suisse is focusing on the Asia-Pacific property market as the region’s high-net worth individuals are upbeat on investing both domestically and in developed markets overseas.

“Our business strategy in the Asia-Pacific region is two-fold. Firstly, we are looking to increase the value of our assets under management [AUM] in the property sector in Asia-Pacific as the region’s emerging markets such as China and Southeast Asia have the potential for high yield, which is making them attractive for Asian investors,” said Christopher Chiang, head of real-estate Asia-Pacific, Credit Suisse.
Secondly, he said, Credit Suisse aims to help investors in the region make investments in developed markets. 
Currently, Credit Suisse’s AUM stands at US$50 billion (Bt1.5 trillion) globally, with around $2 billion in Asia.
“We have raised $1 billion from Asian investors in the past two years and we aim to continue increasing our AUM from Asian clients in the upcoming years,” Chiang said, not revealing a specific target.
When compared to their Western counterparts, Asian investors are more attracted to properties that promise high yields despite higher risks, he said. This makes Asian investors more interested in spending on value-added projects instead of core projects.
Value-added projects are when Credit Suisse uses their client’s capital to invest in a property that is empty, half-empty or undermanaged. They then refurbish the property before leasing it or selling it and returning the capital to the investors with a profit. 
In comparison, Western investors are more attracted to core investments, in which Credit Suisse purchases buildings at key locations and leases the property out for long-term income distribution to their clients, he said. 
Asian investors are similar to Swiss investors in that they have allocated 98% of their real estate investment for the domestic market and 2% for the offshore market, said Francisca Farina Fischer, the private bank’s head of real-estate international.
According to a study by Credit Suisse, the appetite for real estate remains strong in developed markets, with cities like Boston, London, Paris, Berlin, Sydney, Tokyo and Seoul having the highest level of liquidity.
This presents key opportunities to Asian investors who are looking to invest in property overseas.
For instance, the rate of vacancy has been dropping and is at sub-1 per cent in Tokyo, indicating a strong demand for property in the city, according to research by Credit Suisse. 
The office vacancy rate in Munich is also at 1 per cent, Fischer added.
The key challenge for investing in Thailand’s property is the lack of transparency on both regulation and market data, Chiang said. Furthermore, the strengthening baht is also discouraging foreign investors from considering the Kingdom’s real-estate sector. Finally, he said, there are not a lot of commercial assets being traded in Thailand. 
“While we do not have investments in Southeast Asia at present, Credit Suisse is looking at opportunities to boost its footprint and AUM in the region as growth prospects in the Southeast Asian property market is promising,” Chiang added.

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