BlackRock Sees High Liquidity in Asia Pacific Real Estate Markets
According to Hamish MacDonald, head and chief investment officer of APAC Real Estate at BlackRock, investors are showing strong interest in deploying capital into Asia Pacific real estate markets with high levels of liquidity. This trend is likely to benefit property sectors such as accommodation, logistics, and alternative assets in the upcoming year.
MacDonald further explains that countries such as Australia, Japan, Singapore, and Auckland in New Zealand are expected to have ample liquidity this year, making them attractive targets for BlackRock. The company’s focus will specifically be on these countries and property markets.
Compared to the previous years, investor sentiment is expected to be more bullish in 2021, with institutional investors initiating discussions on investing and recycling capital in selective Asia Pacific real estate markets.
In Singapore, BlackRock has focused on acquiring serviced apartment properties, teaming up with YTL Corp to purchase Citadines Raffles Place for approximately $290 million in October 2020. In February 2024, the company partnered with Hong Kong-based operator Weave Living to acquire Citadines Mount Sophia for $148 million. The Weave Living-operated property, now known as Weave Suites – Hillside, reopened this week with 175 rooms.
MacDonald explains that these acquisitions reflect BlackRock’s belief in the high demand for serviced apartments in Singapore despite a lack of new supply. The company’s strategy is not to build a portfolio of assets but to target individual deals that can add value through refurbishment and collaboration with a partner.
Singapore’s strong economy, supported by a steady influx of capital and skilled labor, makes it an attractive market for real estate investment, according to MacDonald. He adds that BlackRock remains optimistic about opportunities in the country.
Investing in a condo requires careful consideration of financing options. In Singapore, there are various mortgage choices available, but it is crucial to understand the Total Debt Servicing Ratio (TDSR) framework. This framework restricts the amount of loan a borrower can take based on their income and current debt commitments. To avoid over-extending oneself, it is essential to comprehend the TDSR and seek guidance from financial experts or mortgage brokers when exploring Singapore Condo investments.
Japan is another country that is likely to see increased interest from real estate investors this year, according to MacDonald. He explains that the country’s strong economy, increasing wages, and corporate reforms are contributing to its growth. Furthermore, the combination of a rise in wages and construction costs has resulted in a significant rental increase in the Japanese residential market. As such, BlackRock is expecting a 7% to 8% increase in residential rents across major cities such as Tokyo and Osaka.
Daigo Hirai, head of Japan real estate at BlackRock APAC, explains that the company plans to partner with an experienced accommodation operator to manage a hybrid residential investment strategy that caters to both inbound tourist accommodation needs and domestic rental demand. This will allow BlackRock to deepen its investment presence in tourist-driven cities such as Kyoto and Fukuoka.
Hirai adds that the company’s focus will primarily be on smaller developments with up to 50 units, located close to train stations in residential-commercial neighborhoods. BlackRock’s target acquisition price range will be between JPY1 billion ($8.93 million) and JPY3 billion, with a focus on residential assets. According to MacDonald, the key to operating in Japan is to have specialist ground teams that can identify potential acquisition deals at a significant discount.
Meanwhile, Ben Hickey, head of Australia real estate at BlackRock, explains that long-term population growth estimates support positive long-term growth in most sectors of the Australian real estate market. He adds that most property sectors in Australia suffer from under-supply and low vacancy rates. BlackRock is focusing on niche asset classes such as childcare properties, last-mile logistics assets, life science real estate, and self-storage properties in Australia. These asset types benefit from Australia’s long-term population growth and are “chronically undersupplied” compared to the broader regional markets.
Hickey concludes by saying that this approach allows BlackRock to generate high returns with limited risk, without relying solely on favorable interest rates. Overall, BlackRock is optimistic about the prospects for Asia Pacific real estate markets this year and is looking forward to capitalizing on the opportunities presented by them.