Market Overview

APREA Chief Verwer is Bullish on Asian Real Estate


Peter Verwer, chief executive of the Asia-Pacific Real Estate Association (APREA), said real estate investors looking for opportunities are all eyes on Asia as the region offers potential for growth. Verwer made the statement during video interview with at NAREIT headquarters in Washington.

“Asia is really on the move,” he said. Among the key developments, the new government in India has approved REITs, making it the 31st country across the globe to do so.

All eyes remain on China and what would be a major addition to the global REIT market. Verwer noted that the size of China’s real estate market is likely to exceed that of the United States by 2022. Verwer said pension funds throughout Asia stand to become a powerful force in the investment landscape, which could have a major impact in China.

“If you look at the pension funds across Asia and in China, in particular, there’s an opportunity for them to invest more and more into real estate. A REIT option would transform that marketplace,” he said.

In terms of the evolution of REITs in Asia, the disparate REIT models in the region are converging towards one closer to that of U.S. REITs. For example, in Hong Kong, the government recently allowed for REITs to generate a portion of their income from development activities.

Verwer took over as head of APREA this year from former chief executive Peter Mitchell. Verwer discussed some of his priorities for the organization. He described the current environment in the Asia-Pacific market as “one of the greatest opportunities for real estate wealth creation that we’ve ever seen.” As such, he said his chief objective is to expand opportunities for real estate investment in Asia.

Verwer also discussed the potential spread of the REIT approach to real estate investment across Asia in the form of new REIT legislation.

A separate report by the International Business Times said that New York real estate market is about to see more gains this year as China’s housing market cools.

China’s housing market is on a downward spiral with housing prices dipping by 0.3 percent in August. While home prices in the country were up 4 percent year-on-year on a national level, these represent a fifth consecutive decline in prices. The report noted that economists and industry representatives expect Chinese investors to turn to the United States to build their portfolio, particularly in markets in New York, as a result of China’s housing market downdraft.

China’s red hot real estate market started to cool as fears of an impending bubble surfaced due to market over activity. And to prevent the bubble from bursting, the Chinese government ordered investors to limit domestic housing purchases and increase equity payments.

Obviously, wealthy Chinese investors have to find a new place to put their money. 

Another event that has the potential to push Chinese investors out of their homeland is China’s plans of further loosening its capital controls. This could lead to more capital outflow, warned the International Monetary Fund, according to the report. China’s capital account suffered a 3 percent deficit in 2012 when it loosened its capital controls. 

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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