Editor note : Super fund in Australia is the same as MPF fund in Hong Kong.
AUSTRALIAN institutional investors are increasingly investing in commercial property in Asia in a bid to diversify, according to a senior funds manager.
Asia-Pacific regional director for LaSalle Investment Management David Edwards said many Australian superannuation funds had had success in their core local market.
”In this cycle, they were overweight in Australia, which was beneficial compared with other markets,” he told BusinessDay during a visit to Melbourne. But this may not be the same in the future.
”Diversification is always important,” Mr Edwards said. Domestic markets were often difficult and competitive, prompting the thought: ”Should I diversify into the fastest-growing market?”
Mr Edwards, who has been based in Hong Kong since the early 1990s, said Asian property markets were back to growth. The economic and market correction had happened quickly.
”This became evident at the end of the third quarter last year. Japan is the exception, but Japan is getting better now, too.”
Mr Edwards said in the run-up to the global financial crisis, many Asian property investors ”went up the risk curve”, meaning there was a high risk of failure – and success.
”There is now a movement back to the core. Asia was always high-risk, but ‘the core’ is now mainstream. I see opportunities for Australian investors in Asian core property,” he said.
LaSalle Investment Management, which is a subsidiary of the New York-listed Jones Lang LaSalle real estate group, manages $US39 billion ($A45 billion) of real estate investments worldwide, with $US7 billion in the Asia-Pacific region. Mr Edwards said core investments were in office and retail, with also some exposure to logistics.
Most of the Asia-Pacific region investment is in Japan (61 per cent), followed by Singapore (11 per cent) and Australia (10 per cent). LaSalle has a joint venture with Westfield in the Doncaster shopping centre.
Mr Edwards said China, with 3 per cent of the investment, had a ”compelling macro-economic story”, but was still challenging. ”It’s hard to underwrite due to tax code changes. It’s hard to identify a return,” he said.
”There’s much less corruption in China these days, but no country on either side of the Atlantic can claim to be free of corruption.”