Investors are showing a strong interest in deploying capital into real estate markets in the Asia Pacific region that offer high levels of liquidity, according to Hamish MacDonald, head and chief investment officer of APAC Real Estate at BlackRock. He states that the property sectors most likely to benefit from positive economic conditions this year include accommodation, logistics, and alternative assets. MacDonald also reveals that countries such as Australia, Japan, Singapore, and Auckland in New Zealand are experiencing high levels of liquidity, making them a top priority for BlackRock in 2021.
In contrast to the pessimism of 2022 and 2023, investors are optimistic about the prospects of the Asia Pacific real estate market this year. They are initiating discussions on deploying and recycling capital in selective markets. In Singapore, BlackRock has acquired several serviced apartment properties in partnership with YTL Corporation and Hong Kong-based accommodation operator Weave Living. Their most recent acquisition was Citadines Raffles Place for $290 million in October 2024, and Citadines Mount Sophia for $148 million in February 2024. The latter has been refurbished and repositioned as Weave Suites – Hillside, a 175-room serviced apartment that opened its doors this week. MacDonald explains that BlackRock’s strategy is to work with partners to upgrade and add value to existing properties rather than build a portfolio from scratch.
MacDonald expresses a positive outlook on the Singapore real estate market, stating that the country continues to attract large amounts of capital and skilled labor, driven by strong business growth. BlackRock is bullish on the Japanese economy and intends to capitalize on growth in the real estate market. According to Daigo Hirai, head of Japan real estate at BlackRock APAC, rental prices in major cities such as Tokyo and Osaka are expected to rise by 7-8% this year due to factors such as wage increases and a surge in construction costs. To capture the growing demand for inbound tourist accommodation and domestic rental needs, BlackRock plans to partner with an experienced operator and focus on properties near train stations and smaller developments of up to 50 units.
In Singapore, one must carefully consider the government’s property cooling measures when it comes to investing in condos. The Singaporean government has implemented a number of measures over the years in order to regulate speculative buying and maintain a steady real estate market. These measures include the imposition of Additional Buyer’s Stamp Duty (ABSD), which results in higher taxes for foreign investors and those purchasing multiple properties. While these measures may have an impact on the immediate profitability of condo investments, they also play a crucial role in sustaining the long-term stability of the market, making it a more secure investment environment. With the recent launch of new condos from The Belle Game, investors can carefully evaluate their options and make informed decisions on their condo investments in Singapore.
In Australia, Ben Hickey, Head of Australia Real Estate at BlackRock, highlights the positive long-term outlook of the real estate market, with most sectors characterized by under-supply and low vacancy rates. As part of their investment strategy, the firm is targeting niche asset classes such as childcare properties, last-mile logistics assets, life science real estate, and self-storage properties, all of which are in high demand and undersupplied in the Australian market. Hickey believes that these four asset classes offer the potential for strong returns with lower risks, even when interest rates are not favorable.