Financial restructuring by Japanese companies and rising population density in Australia look set to create attractive investment opportunities for corporate real estate and housing facilities in those countries, said a managing director of The Carlyle Group’s Metropolitan Real Estate platform.
John So, Co-head of Metropolitan Real Estate, said that many Japanese companies, which are putting real estate assets on the market to shore up their balance sheets, are more focused on closing sales quickly than the price, meaning that investors are able to snap up assets at a 10-20% discount of the market price.
In a presentation for the ASK 2019 Real Estate & Infrastructure Summit hosted by the Korea Economic Daily in Seoul on Oct. 23, he recommended a bottom-up approach towards the Japanese real estate market, noting that a top-down approach would only paint Japan as a country with slow GDP growth and a rapidly aging population.
In Australia, millennials’ and retiring baby boomers’ growing preference for living in urban areas is increasing the population density of areas with good transport networks. In line with rising demand and improved transport networks, well-located Grade-B properties may be upgraded to Grade-A standards.
So named urban regeneration, technology disruption and demographic change as the three keywords to watch out for real estate investing and recommended investing in countries with transparent and open market policies supported by stable legal systems and significant market liquidity.
In addition to Japan and Australia, he identified Beijing and Shanghai in China as regions that meet these criteria.
He also noted that co-investment opportunities are growing because mid-market managers are seeking alternative forms of equity investment, shying away from competition with mega-managers which take the lion’s share of capital commitments.
Co-investments made with local management partners provides access to attractive assets and save fees, he added.
As of June 30, 2019, Metropolitan Real Estate managed approximately $2.4 billion of client capital across 35 private equity real estate partnerships.
So has 30 years of real estate investment experience, including leadership roles at Grosvenor and Jardine Fleming. Based in Hong Kong, he received his B.A. in urban studies from Brown University and his master’s degree in urban design from the University of Hong Kong.
By Hyun-il Lee
<Edited by Yeonhee Kim>