For a more targeted approach, Marriott suggests considering alternative investment categories such as student housing and retirement homes, which are two areas seeing strong growth, both in Asia and internationally, thanks to favourable demographics.
Moving into individual markets does require a deeper knowledge of that market, and a better understanding of local risks. Investors need to keep in mind that real estate is usually not as liquid an investment as a stock or bond, which means it takes longer to sell an asset. For investment in commercial real estate, it can be important to track industrial supply, demands and GDP that may impact those lead indicators.
According to the New wealth rising survey, almost half of investors in Hong Kong (47 percent) say they currently hold real estate in their portfolios. Additionally, of the HNWIs in Asia who say they own a secondary domestic residence, more than half (57 percent) say their primary purpose is long-term investment.
“You're going to look at the political, legal and financial risks involved in any specific country," says Marriott. “Legal in terms of land title ownership and the ability to inforce ownership laws, financial in terms of currency exchange and interest rates, and the requirement to hedge your currency."
Another option is to invest in logistics, which operate out of buildings for storage and distribution. This is a rapidly expanding space as global trade continues to grow. “There's been strong growth in logistics in China; we're starting to see that also grow in India, Indonesia, and Vietnam," says Marriott, adding that the increase is driven by growth in e-commerce.
Trade dispute and economic uncertainty
The U.S.-Chinese trade dispute has dominated headlines of late, and for good reason. According to a recent report by the Asian Development Bank, the conflict is currently the largest risk to the Asian economy, and many economists have cut growth forecasts as a result.
The EIU survey found 83 percent of HNWIs in Asia say it's more important than ever to future proof one's wealth. Additionally, more than half (56 percent) say global economic uncertainty is a top concern when it comes to their ability to create, preserve or manage their wealth.
The trade dispute has raised concerns about the economic outlook for both the U.S. and China, as well as the broader Asia region, but it also presents opportunity. According to Marriott, international private equity funds continue to invest money in Chinese markets despite the continuing uncertainty - seeking to take advantage of more opportunistic pricing.
“I think it's actually creating an opportunity in China, rather than changing necessarily the dynamic," he says. For instance, concern over the dispute can increase the appeal of buying convertible debt in real estate developments, as the securities bring in interest payments, but can be converted to stock in the project if it is successful. The economic stress of the dispute also is prompting some developers to sell assets in order to clean up their balance sheets, which presents opportunities for a savvy investor.
Economic uncertainty can be troubling for investors, and means they should proceed with caution, but it doesn't change the long-term economic picture for the region.
There is also reason to believe the financial activity in the real estate sector globally still has plenty of momentum. According to research firm Preqin, assets under management in the real estate sector are projected to hit $1.2 trillion in 2023, which would be a 50 percent increase from 2017.
“The fundamentals are that there is a broad, long-term-sustained economic boom in Asia-Pacific," says Marriott. “There will be cyclical booms and busts within each individual country, but the broad economic facts will remain the same."
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