The real estate market is a sector that is filled with a certain sense of unease and trepidation, as its foundations could easily shift and give way to noteworthy changes. Presently, the COVID-19 pandemic has, like with many other sectors, affected the real estate market in transformative ways — accelerating a number of trends and uncovering significant opportunities.

As the Managing Partner and the Asia-Pacific Head of Brookfield’s Private Funds, based in Singapore Mr Niel Thassim is responsible for developing and maintaining relationships with leading investment partners in the region. Drawing upon his extensive experience in finance, accounting and real estate investment management, he shared his insights into the Asia-Pacific real estate market in a webinar hosted by James Cook University in Singapore.

According to Mr Thassim, one of the biggest macro-drivers in Asia-Pacific real estate is the rise of the Chinese middle class. This phenomenon is having, and will continue to have, a profound impact across sectors in the region. Today, the Chinese middle class includes over a 150 million households and over 400 million people, which is more than the total population in the United States.

As the Chinese middle class grows, we can observe a greater number of people migrating from the rural areas to the cities. Now, more than 60 per cent of the Chinese population lives in cities, and about 70 per cent of the urban population is classified as middle income. This has created a huge demand for both affordable and luxury residential homes in the cities.

At the same time, the growing Chinese middle class has led to a developing service, R&D and tech economy, which drives significant demand for modern, highly-sophisticated, high-tech offices.

On a regional scale, the rise of the Chinese middle class and their predisposition to spend more on imported goods has transformed the nature of supply chains across the region, thus requiring a large number of fulfilment and logistics hubs to anchor this important demand. While currently hindered by the COVID-19 pandemic, the growing Chinese travel and tourism industry has contributed a great deal to the Asia-Pacific hospitality industry, and will likely be one of the fastest-growing sectors coming out of the COVID-19 recovery.

A few other notable trends — such as technology and e-commerce, the COVID-19 pandemic, and de-carbonisation — are also transforming and disrupting the real estate sector, while providing opportunities for real estate investors. For example, the COVID-19 pandemic has reshaped the way we think about offices. Despite the increase in work-from-home arrangements during this time, the reality is that people need to physically interact in order to exchange ideas, foster culture, mentor staff and develop skills. As such, this presents an incredible opportunity to invest in transforming offices to make them “post-COVID-competitive”. As companies bring their staff back into offices, they need to provide them with much higher-quality facilities — including more space for each employee for social distancing, better air filtration and sanitisation systems, and more.

On the de-carbonisation side of things, companies are using more green construction materials, as well as implementing more energy-efficient lighting, distributed power generation and dynamic heating and cooling systems. In the long-term, these features add more value to the spaces they are a part of.

In the office sector, spaces that are unable to keep up with these trends will very quickly become obsolete. On the other hand, those who do have the skills and capital to invest in transforming the office spaces will outperform the market disproportionately over the long-term. This opens up tremendous investment opportunities in the office sector across the region.

View the full recording of the webinar “The Outlook for the Real Estate Market in Asia Pacific”.

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Media: Edwin Teo [email protected]