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Asia’s industrial action keeps the spotlight

Louise Kavanagh
Chief Investment Officer, Head of Funds Management, Asia Pacific
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As featured in PERE’s 2020 Asia roundtable, Louise Kavanagh, Managing Director, Real Estate, Asia Pacific, discusses with other participants the Asia private real estate market and the compounding positive impact that COVID-19 has had on logistics property.

While the U.S. and Europe are still grappling with the economic impacts of the COVID-19 pandemic, Asia is already in recovery mode. Consequently, many of the secular trends in the region’s private equity real estate markets feel accelerated to the industry’s practitioners.

Although Asia’s transaction volume in the first half of 2020 dropped 32 percent year-on-year, it rebounded by 35 percent in Q3 2020, according to broker JLL’s latest figures. During the third quarter, industrial property, the market’s darling sector, performed predictably the strongest, with transactions up 76 percent year-on-year.

Traditionally, industrial would expect a premium over office reflected in the entry yield because of factors such as depreciation and obsolescence, re-placement cost and shorter leases. This seems to be changing. Investors need to critically assess how they value and price risk and return in the new world order.

— Louise Kavanagh, Managing Director, Real Estate, Asia Pacific

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