Demand for real estate in the Asia- Pacific region will increase next year as economies get stronger and institutional investors diversify their portfolios, LaSalle Investment Management Inc. said.
Bolstered by low interest rates and fiscal measures, economic growth may strengthen next year in Asia and lead to a gradual pick-up in investment decisions, LaSalle said. Real estate values may be boosted by an abrupt economic recovery in China, according to the investment management company, which has $47 billion assets under management.
“The demand for core opportunities has not diminished throughout the past few years, and it is only projected to grow as Asian pension, insurance and sovereign wealth funds expand their allocations to real estate,” Paul Guest, Asian strategist with LaSalle, said in an e-mailed statement. Investments “should broaden provided there is no additional shock and stimulus rekindles growth as anticipated.”
Property prices may gain as higher public spending and younger populations support domestic demand and lure investment, even as the global expansion weakens. The Organization for Economic Cooperation and Development said last month a combination of “cyclical factors, government policies, and longer-term shifts in economic structure” are likely to continue to underpin consumption in Southeast Asia, China and India.
Demand for real estate in the region may increase as state- owned investment companies such as China Investment Corp., known as CIC, diversify assets to offset volatility. CIC’s alternative investments surged almost 40 percent in 2011, according to the company’s annual report, and Norway’s $650 billion sovereign wealth fund got approval in 2010 to invest as much as 5 percent of its capital in real estate, up from 0.3 percent at the end of June this year.
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