While investors have long clamored to invest in China, the potential for investment capital flowing out of the country is even more promising for the commercial real estate market, according to Peter Mitchell CEO of the Asia Pacific Real Estate Association (APREA).
"I think the Chinese government has been quite concerned to hose down the scale of investment to avoid too much of a bubble," Mitchell said in an interview with REIT.com in New York at REITWeek 2012: NAREIT's Investor Forum. "Everyone is talking about a hard landing or a soft landing, but certainly there's a lot of pressure and a lot of keenness on the part of the Chinese government to Chinese investors to actually look for opportunities offshore and deploy capital offshore."
Mitchell said signs of that interest in investing outside the country are already cropping up with the emergence of companies that are licensed to invest abroad.
Mitchell cited external shocks to Asia's economy and the ongoing issues in the European financial markets as some of the major stories in market in the first half of 2012. He did say, though, that the Asian real estate market has shown "buoyancy," particularly with regard to the amount of capital raised via initial public offerings. Mitchell said the IPO pipeline is continuing to build for Asian real estate companies and eventually will lead to more companies going public. In Japan, for example, the first REIT was listed since 2007, an event Mitchell described as a "landmark." Singapore is another market with potential for listings, according to Mitchell.
Looking ahead, Mitchell said new REIT markets should continue to emerge in the second half of 2012.
"Thailand now has what I would suggest is a true REIT law," he noted. A REIT act has been passed in the Philippines as well, according to Mitchell, but it is currently on hold as policy regulations are addressed. Mitchell also said he foresees the "two big elephants in the room," India and China, eventually develop REIT regimes of their own.