1、Conference Takeawaysfrom the Asia Pacific Real AssetsLeaders Congress 2024A NEW GLOBALORDERThis years theme for the Leaders Congress,“A New Global Order for Real Assets,”resonates with macroeconomic trends,including peaking inflation and the anticipated cuts in interest rates.A renewed sense of opti

2、mism is emerging in Asia,especially as key economies like India,Japan and China align for growth.“Asia is no longer a hidden gem.More institutional global investors are investing in this part of the world,”Sigrid Zialcita,CEO at Asia Pacific Real Assets Association said in her welcome remarks at the

3、 conference held in Tokyo.Asias structural growth story remains intact,she noted,highlighting the expanding middle class and infrastructure needs as key drivers.Low-carbon transition and digital disruption trends are also opening up new investment avenues,she said.Asia Pacific Real Assets Leaders Co

4、ngress 2024John Lim,Chairman at APREA,also shared his optimism reflecting on the evolution of interest rates and market dynamics over the past year.He noted that the Federal Reserve lowering rates would spur investment activity.Lim highlighted the significant impact of U.S.monetary policy on Asian m

5、arkets,particularly for REITs,which are likely to gain traction as valuations recover.However,he also pointed out challenges in the region,such as slower growth in China and a more complex risk environment,which have led to more cautious capital deployment.While capitalization rates in Asia Pacific

6、have largely stabilized,signalling stronger fundamentals,the prospects for major repricing remain limited.Investors are avoiding China,instead focusing on opportunities in Japan and India.INTRODUCTIONSigrid ZialcitaJohn LimIn his keynote address,Yosuke Tsutsumi,Assistant Vice-Minister for Constructi

7、on,Engineering and Real Estate at the Ministry of Land,Infrastructure,Transport and Tourism,highlighted Japans ongoing economic growth after a prolonged period of deflation.He pointed to the promising landscape for real estate investments,offering insights into land price trends in major cities like

8、 Tokyo,Osaka and Nagoya,which have rebounded from pandemic-related declines.The office and condominium markets are also experiencing favorable market conditions for investment.The tourism sector is also booming,with expectations for a record number of foreign visitors and increased hotel constructio

9、n,driven by Japans goal of attracting 60 million tourists by 2030.Additionally,the logistics market is expanding rapidly due to the growth of e-commerce.J-REITs(Japan Real Estate Investment Trusts)offer stable returns with yields higher than those in other countries.Tsutsumi concluded by outlining t

10、he governments goal to increase real estate securitization to 40 trillion yen by 2030,reinforcing Japans position as an attractive investment destination.Asia Pacific Real Assets Leaders Congress 2024“Real assets in the Asia Pacific remain strategically positioned for investors looking to capitalise

11、 on the regions growth potential,but within a highly divergent environment,”Lim remarked.“Each country has its own market fundamentals and the impact of the Feds interest rate policy wont lift all boats.”In China,recent government stimulus measures have been welcomed,although sustainable growth rema

12、ins a key concern.The infrastructure sector,in particular,presents untapped potential,with investments increasingly driven by technology and sustainability trends.Yosuke TsutsumiAsia Pacific Real Assets Leaders Congress 2024Takahiro UchidaThe keynote presentation by Takahiro Uchida,CEO of Kenedix As

13、ia,explored the evolution of Japans real estate investment industry over the past 25 years and its trajectory moving forward.Key sectors,including J-REITs and private real estate funds,have matured,with significant growth attributed to diversified capital sources and stable demand.The industry has a

14、lso seen the emergence of innovative asset classes like tokenized real estate,reflecting the evolving needs of sophisticated investors and the broader shift toward digital transformation.According to Uchida,Japans real estate market continues to attract domestic and international investors,drawn by

15、its solid fundamentals and growing opportunities in sectors like single-family residences,logistics,and hospitality.International players,including sovereign wealth funds and institutional investors,are increasingly active,complementing domestic capital flows.Challenges remain,such as navigating mar

16、ket maturity,enhancing liquidity,and fostering ESG-driven investment strategies,but these also present opportunities for further innovation.Looking ahead,the presentation emphasized the importance of adaptability and forward-thinking in addressing industry challenges.Integrating digital tools,creati

17、ng sustainable business models,and expanding access to individual investors are key to driving growth.With the rise of cross-border transactions and a focus on delivering stable returns,Japans real estate industry is poised to remain a dynamic and integral part of the global market.KEYNOTE PRESENTAT

18、IONJapanese Real Estate Investment IndustryThe conference kicked off with a discussion on the growing significance of the Asia Pacific region as a key diversification tool for global investors.While year-to-date transactions in the region remain lower than in previous years,the office markets in Jap

19、an,Korea and India are showing distinct trends.Notably,these markets are seeing a greater return to in-office work compared to the remote work trends prevalent in the U.S.and Europe.The regions resilience during economic downturns was also highlighted.“APAC is coming of age for global investors.Whil

20、e Japan and Australia have been key markets,India is now gaining attention,”said Amit Diwan,Country Head of India at Hines.“Investing in India offers exposure to strong structural tailwinds,but deep local expertise and the ability to execute at the asset level are crucial.”Moderated by Thomas Morize

21、t of MSCI,the panel discussion emphasized the growing importance of the region,with Japan and India becoming increasingly attractive due to their strong economic growth and diversification potential.The hospitality sector is evolving,with an increased focus on wellness and unique experiences.Additio

22、nally,Japans residential market is viewed as a stable and attractive investment option.Environmental,social and governance(ESG)factors are playing a more prominent role,with investors increasingly willing to pay a premium for sustainable assets and practices.Other emerging sectors include data centr

23、es,life sciences and senior housing.Panelists stressed the importance of adapting and reimagining real estate strategies to respond to evolving market conditions,noting that the ability to repurpose assets is becoming increasingly crucial.PANEL SESSION 1Real Estate Reimagined:Whats NextAsia Pacific

24、Real Assets Leaders Congress 2024Asia Pacific Real Assets Leaders Congress 2024“We are seeing the hotelification of the office market,retail evolving with entertainment and residential now focused on community building.An active management strategy is key,”said Neel Raheja,Group President at K Rahej

25、a Corp.India,in particular,is noted for offering some of the highest unlevered internal rates of return globally,with strong demand for REITs and a robust domestic market supporting liquidity.However,Anish Rai at RMZ Real Estate pointed out that,while Indias office sector is booming,geopolitical ris

26、ks and educational gaps in technology could pose challenges.Russell Wee at Jean Yip Developments and James Ong at TPC emphasized the importance of proactive asset management,particularly in hospitality.Ong discussed how wellness is being integrated into hotel experiences,noting that his company oper

27、ates not just as a hotel,but as a wellness school,offering medical check-ups and tailored wellness programs.Wee,on the other hand,shared a more cost-effective approach,focusing on low-cost wellness options without extensive services.Despite their divergent strategies,both acknowledged the increasing

28、 demand for wellness-oriented experiences among consumers.The next panel discussion shifted focus to the rapidly evolving data-centre industry,where the impact of AI,investment strategies and technical challenges were central themes.A key takeaway from the panel was the explosive growth in demand fo

29、r data centres driven by AI.This AI-driven expansion could outpace the infrastructure of traditional data centres,with power supply becoming a limiting factor in certain markets.“Data centres are riding on a megatrend with strong tailwinds.They are recession-proof and investors are eager for exposur

30、e and diversification with stable returns,”said Michelle Lee,Managing Director,Private Funds(Data Centre)at CapitaLand Investment.Diarmid Massey,CEO,Data Centres at ESR,noted that the construction of data centres may slow in saturated markets and shift to secondary markets that are less constrained

31、by power supply.While AI is a significant driver of this demand,the growth of cloud and digital transformation also contributes to the sectors expansion.As AI-driven data centres become larger and more expensive,the need for funding,specialized investment funds and partnerships is rising.The shift t

32、owards AI-driven data centres is increasing construction costs,mainly due to the need for advanced cooling solutions such as liquid cooling over traditional air cooling and the higher density of racks and servers.Several companies are working towards carbon neutrality by 2030,aiming to power their d

33、ata centres with renewable energy.Still,challenges remain in ensuring consistent power supply as renewable sources like solar are intermittent.“The genie is out of the bottle.AI is going to grow but it is a supporting element to the digital market thats already there,”said Alistair LaBrooy,Director

34、at AREA Real Estate Advisory Sdn Bhd.Asia Pacific Real Assets Leaders Congress 2024PANEL SESSION 2Data Centres in the Age of AIThe third panel turned to the logistics and warehousing industry in the region,noting how the sector has evolved since the pandemic.The shift towards home delivery services

35、has driven increased demand for warehousing,while traditional office spaces have faced declines.Joe Gagnon,Partner at Hillhouse and Co-Head of Real Assets at Rava Partners,emphasized the compelling investment opportunities in the warehousing sector.He pointed out the ongoing growth of e-commerce and

36、 technology,which continue to drive demand for modern warehousing solutions.Although demand varies by market,most regions are under-supplied compared to their developed counterparts,presenting substantial opportunities for development.While markets like Australia are experiencing a slowdown,regions

37、such as India are witnessing a boom.Conversely,Gagnon noted Chinas challenges in lower-tier cities but the long-term outlook remains optimistic.“Investors are focusing more on logistics than on industrial,but thats short-sighted,”said Gagnon.“If youre active in developing Asia,I believe cap rates fo

38、r industrial should be lower than logisticsthis would radically oppose the thinking of most investors.”Gagnon identified China as the best investment opportunity in the region at present.Anshul Singhal,Managing Director at Welspun One,spoke on the rise of e-commerce in India,highlighting the emergen

39、ce of“quick commerce,”where consumers demand deliveries within 10 to 20 minutes.This illustrates the rapid evolution of consumer behaviour in the region.PANEL SESSION 3From Resilience to Reinvention:Logistics and WarehousesAsia Pacific Real Assets Leaders Congress 2024Anish Sanghvi,Partner at PwC In

40、dia,discussed the evolution of investment structures in India,noting that while entry and exit strategies can still be complex,the regulatory environment has become more liberalized,making transactions easier.Katsuyuki Victor Mineta,CEO at KIC Holdings Inc.,offered insights on Japans logistics marke

41、t,which has matured over the past two decades.He noted that Greater Tokyo is currently facing an oversupply of logistics space.However,there is rising demand for cold storage,driven by demographic changes and an aging population.Mineta also identified potential in AgriTech and hybrid facilities comb

42、ining warehousing and agricultural research.Asia Pacific Real Assets Leaders Congress 2024Moderated by Shobhit Agarwal,CEO at ANAROCK Capital Advisors,the panel further explored the types of occupiers driving demand in the logistics sector.Gagnon highlighted the increasing importance of manufacturin

43、g,particularly assembly and testing compared to traditional heavy industries.This shift is creating new opportunities for investors who can adapt to the changing landscape.The discussion also touched on technological innovations in warehousing,including robotics and automated racking systems that ha

44、ve revolutionized warehouse operations.However,labour issues and rising construction costs were noted as significant concerns impacting investment returns.The next session focused on Japans Real Estate Investment Trust market and its growing appeal to investors,particularly in light of current trend

45、s in yield spreads and rising interest rates.While challenges exist due to higher rates,some panelists believe that rental growth and inflation-linked contracts will continue to support the attractiveness of Japans REITs.“Rates are increasing but wont rise to levels seen in the U.S.or Europe,”said Y

46、uma Kawatsuji,President at GLP Japan Advisors Inc.The inflationary environment is positive for logistics REITs as there is room to increase rents.Costs are rising,but not as much as rents.The discussion turned to Japans office market,which remains resilient despite global trends,with strong demand f

47、or office space driven by cultural factors and labour shortages.This has resulted in steady rental growth,contrasting with the more negative sentiment seen in markets like the U.S.In addition,private J-REITs are rapidly gaining popularity among institutional investors due to their stable dividends a

48、nd lower volatility.However,concerns about product diversification,market size and achieving economies of scale were raised.PANEL SESSION 4Unlocking Growth of Asia Pacific REITsAsia Pacific Real Assets Leaders Congress 2024When it comes to international expansion,Singapore has established itself as

49、a global REIT platform while Japanese REITs primarily invest domestically,reflecting a more conservative investor approach.Only a handful of Japanese REITs hold overseas assets.This cautious stance contrasts with Singapores more aggressive strategy,positioning itself as a complementary platform for

50、Asian sponsors seeking international growth.Singaporean REITs are also adapting by diversifying into new asset classes and co-investing in developments to manage rising construction costs,according to Ronald Tan at Singapore Exchange.This flexibility helps capture growth opportunities despite econom

51、ic challenges.While rising interest rates could shrink yield spreads,there is a general consensus that the market can continue to benefit from leverage for some time.There is also a noticeable shift in investor preferences,with a move towards more variable income expectations in response to inflatio

52、n and increasing rates.“Theres an inflection point coming in Japan with inflation returning,”said Naoki Suzuki,CEO at KJR Management.“The old style of REIT management focussing on dividend paymentssuch funds will die at some stage.Growth of cash flow and income is becoming equally important.”Asia Pa

53、cific Real Assets Leaders Congress 2024The discussion then moved to security tokenization,a new frontier in real estate investment that leverages blockchain technology and fractional ownership.The session included panelists Akihiro Nakao,Executive Officer,Head of Digital Securitization Department,Ke

54、nedix,Inc.;Kimio Mikazuki,Representative Director and President,Osaka Digital Exchange Co.,Ltd.;Ryosuke Ishizuka,Head of Real Estate&REIT Sector Corporate Finance Dept.4,Nomura Securities Co.,Ltd.;Toshinori Sasaki,CEO,BOOSTRY Co.,Ltd.;with Go Masuda,Chairman,Japan Security Token Association as moder

55、ator.PANEL SESSION 5Security Token Offerings:A New FrontierAsia Pacific Real Assets Leaders Congress 2024Real estate tokenization is expected to reach$16 trillion by 2030,up from just$2.7 billion in 2022.In Japan,the cumulative issuance of tokens has already exceeded 140 billion yen.According to pan

56、elists,security tokens in Japan are predominantly real estate-backed securities and corporate bonds targeting retail investors.These tokens provide a balanced mix of real estate and financialization,offering more price stability compared to J-REITs,which can be more volatile.While the tokenization m

57、arket is still in its early stages,there is a need for investor education to unlock its full potential.Esther An,Chief Sustainability Officer at City Developments Ltd.,delivered a keynote on the building industrys critical role in addressing climate change.The sector produces around 40%of global emi

58、ssions,with cities contributing 75%of carbon emissions.Retrofitting buildings to improve efficiency is essential,especially since 70%of todays structures will still be in use by 2050.“Companies and investors globally are motivated by the race to net-zero,which requires trillions in green investments

59、,”she said.“An estimated$3 trillion of financing is needed annually to help the region reach net-zero by 2050.”She emphasised the importance for companies to mobilise capital to future-proof real assets investments,securing returns for long-term business resilience.KEYNOTE PRESENTATION:Future-proofi

60、ng Real Assets Investments in Challenging ClimateAsia Pacific Real Assets Leaders Congress 2024Esther AnThe next panel shifted to Japans residential market,focusing on the strengths of Japans multifamily sector,tenant preferences post-pandemic and investment strategies.Although Japan faces demograph

61、ic challenges such as a declining birth rate,cities like Tokyo and Osaka are experiencing net positive migration,supporting a stable rental market.Urban population growth is expected to sustain rental demand especially for well-located,high-quality properties,said Takuya Yamada,Chairman at IDERA Cap

62、ital Management Ltd.Larger units are popular among dual-income couples,he said.Investors in Tokyo and other large cities report high occupancy rates and relatively affordable financing rates compared to global markets,making Japan attractive even amid rising interest rates.While home price-to-income

63、 ratios are high in many countries,Japans rental market benefits from stability,an established asset management sector and lower development risks compared to markets like the U.K.and Australia.PANEL SESSION 6The Future of LivingAsia Pacific Real Assets Leaders Congress 2024Despite rising interest r

64、ates,Japans multifamily sector remains attractive due to its healthy yield spreads and lower barriers to entry as compared to office assets.Smaller ticket sizes and a stable rental market make it an accessible investment asset class,said Gerald Yong,Chief Investment Officer at City Developments Limi

65、ted(CDL).Post-pandemic,urban living has surged with increasing demand for smaller,centrally located units in Tokyo,said Katsuhiko Hirota,managing partner at Alyssa Partners.Amenities like high-speed Wi-Fi are becoming more crucial as tenant expectations evolve.Cap rates in Japan remain relatively st

66、able despite rising interest rates,partly due to increased construction costs and sustained demand for prime rental properties.Investors continue to prioritize location and proximity to transport,with some moving into outer-city areas to acquire assets with growth potential.Despite the challenges po

67、sed by rising interest rates,Japans residential cap rates are expected to remain stable or even decrease for high-quality properties.Limited new supply,strong investor demand and expectations of rental growth all contribute to keeping cap rates low,especially for prime assets.Asia Pacific Real Asset

68、s Leaders Congress 2024equity investments.Although base rates may well decrease from their high levels,private credit spreads(incorporating an illiquidity premium)are expected to remain attractive,providing yield cushioning for investors.In India,the private credit market is experiencing rapid growt

69、h,fuelled by strong consumption and infrastructure development.It offers attractive returns,ranging between 16%and 24%,significantly higher than bank lending rates of 8%to 11%.According to Ruchir Sinha at Resolut Partners,this sector is filling a critical gap in funding for projects that banks are u

70、nwilling to finance,particularly during the development phase.Investor-friendly reforms introduced in India since 2016 have improved the investment climate,offering equal treatment to both foreign and domestic lenders.PANEL SESSION 7Private Credit:The Rise of an Asset ClassAsia Pacific Real Assets L

71、eaders Congress 2024The discussion moved on to the rapidly growing$2.1 trillion private credit market.Infrastructure credit,which represents approximately 10%of the global market,is expanding at an impressive annual rate of 25%.This growth is being driven by factors like digitalization,the energy tr

72、ansition and government budget constraints.Key markets for infrastructure credit include North America,Western Europe and Australia with significant investments in data centres,energy,transportation,utilities and social infrastructure.Private infrastructure credit is becoming more attractive as bank

73、s have reduced their lending in this space since the 2008 financial crisis,creating a gap for middle-market infrastructure projects that are too small for large banks,said Matt Dimond,Managing Director at SIMCo.Yields in the higher yield infrastructure credit market can range between 9%and 10.5%,off

74、ering returns similar tocan maximize both income stability and growth potential.As interest rates are expected to stabilize,the panelists anticipate private credit,especially in infrastructure,to remain an attractive investment due to its resilience and lower default rates.Asia Pacific Real Assets L

75、eaders Congress 2024The panelists also discussed the varying dynamics of private credit across Asian markets.In Japan,however,bank loans dominate,as low structuring costs and large bank reserves make private credit less common,noted Takashi Imanaga at Mizuho Bank Ltd.In China,although there isnt a f

76、ormal“private credit”sector,private debt growth in real estate was substantial through“shadow banking”and trust companies,particularly until 2017.Following new regulations that restrict private equity funds from direct lending,there has been a shift toward debt-financed mergers and acquisitions and

77、structured securities investments.According to Kong Lingyi,CIO at SCGC Realty Capital,the Chinese economy is showing signs of recovery,supported by government stimulus aimed at stabilizing sectors such as real estate,creating potential opportunities for acquisitions.“I think mezzanine financing and

78、private credit strategies are ideal for todays China,”said Lingyi.While equity investments may be uncertain,leveraging buyouts or mezzanine finance for acquisitions can still yield IRRs of 12%to 15%,she said.From an investment perspective,the panelists emphasized the benefits of blending credit with

79、 equity in portfolios.Credit offers stable income and capital preservation,while equity provides higher potential returns when market conditions are favourable.Following the pandemic,rising interest rates have made credit particularly attractive,with returns on loans between 8%and 10%,in contrast to

80、 the negative leverage challenges faced by equity investments.Craig Oram,Fund Manager at LaSalle Investment Management,highlighted the complementary nature of debt and equity,as combining the two The final panel of the day offered a forward-looking discussion on the real asset market,with a focus on

81、 the outlook for the next 12 to 18 months.The global economic landscape shows varied trajectories with India emerging as a bright spot in Asia-Pacific,driven by strong growth.In contrast,China is focusing on stimulus efforts to stabilize its economy amidst a real estate downturn.Japan is seeing a ca

82、sh inflow into riskier assets which could stimulate growth.While investor sentiment remains cautious,sectoral risk premiums now demand higher returns,the panelists noted.High interest rates and inflation present favourable conditions for operators,providing pricing power and potential for cash flow

83、growth while market volatility could also create new investment opportunities.Josephine Yip,Managing Director at Ivanho Cambridge(the real estate portfolio of CDPQ)mentioned that the U.S.Federal Reserve could potentially reach a neutral rate by late 2025 as inflation nears target levels and labour m

84、arkets soften.“The new market environment forces us to seek strategies that create property value,in markets or assets with strong rental growth,”Yip said.“Within APAC,we view logistics,living and data centres as sectors that offer the most immediate opportunities.We strive to be strategic as we pre

85、pare for 2025 to continue building a diverse portfolio across all our geographies.”The discussion shifted to investment strategies in todays uncertain economic and geopolitical environment with key themes including interest rates,sector diversification and geographical preferences.U.S.investors,face

86、d with lower funding costs,are shifting focus inward,making investment in global markets like Asia-Pacific more nuanced.“2025 definitely looks better than 2024,”said Vikram Garg at Blackstone.“Are we completely out of the woods?Probably not.Europe still faces challenges,where growth is slower.India

87、and Japan look good,China is harder but hopefully the stimulus will help.”Garg also noted that the geopolitics in the Middle East is a key factor to watch.Blackstones investment focus remains on India,Japan,Korea and the living sector in Australia,with a contrarian view on China,where opportunities

88、exist in select sectors.PANEL SESSION 8The Road Ahead:Global Investors ViewsAsia Pacific Real Assets Leaders Congress 2024The panel concluded with a discussion of strategic approaches to investment and risk management.While Japan remains a core market for many investors,Indias growing demand for off

89、ice space continues to offer opportunities,despite ongoing uncertainties.“Pricing risk in different markets is very difficult today,”said Terence Tang,CEO at Atelier Capital Partners.“Its also exciting because the uncertainty presents opportunities for supernormal profits.”Tang sees Japan as an attr

90、active market for investment,noting that while returns may not be extraordinary,the country offers positive leverage and consistent cash flow.“In Japan,you may not get supernormal returns,but youll still generate steady cash flow,”he added.In contrast,he is avoiding emerging markets as they are stil

91、l in the process of defining the appropriate risk premiums.Asia Pacific Real Assets Leaders Congress 2024Asset managers like Blackstone and Brookfield emphasize the importance of portfolio diversification and flexibility in todays market.Both firms are adapting to investor demand by developing new p

92、roducts,such as core-plus vehicles in the Asia-Pacific region.India and Japan have emerged as priority markets for these firms,with key sectors of focus including logistics,residential,data centres and AI.While China remains a riskier market,investors are becoming more drawn to stable,cash-generatin

93、g assets in developed markets,aiming to balance portfolio resilience with the potential of emerging opportunities.“The high-interest rate environment coupled with inflation is actually very productive for real estate in terms of pricing power.Its a good time to acquire high quality assets globally,”

94、said Ikushin Tsuchida at Brookfield Asset Management.Asia Pacific Real Assets Leaders Congress 2024Annual Platinum SponsorAnnual Gold SponsorGold SponsorAnnual Silver SponsorBronze SponsorConference SponsorMedia PartnerExchange PartnerSilver SponsorAsia Pacific Real Assets Leaders Congress 2024F FOLLOW US ONOLLOW US ONWWW.APREA.ASIAAsia Pacific Real Assets Association18 Robinson Road#15-01Singapore 048547enquiriesaprea.asiaLinkedInWeChatX(Twitter)FacebookInstagramSpotifyYoutube