Which type of investor are you?
U.S. Institutional investor?
Global Cities

Think: Asia Pacific cities in tomorrow's world

Harry Tan
Head of Research, Real Estate, Asia Pacific
Mall and Crossing in Tokyo

Over the next few decades, the weight of economic power and impact of structural megatrends will lean heavily towards the Asia Pacific region. By 2030, Asia Pacific, led by China, will account for nearly half of the world’s output (Fig.1), more than 50% of the world’s urban population growth (Fig.2) and almost all of the top 50 global cities with the largest forecast change in wealthy households. Therefore, it is still highly compelling for institutional investors to invest in Asia Pacific when building a sizeable core real estate portfolio. This is true in recent years, in light of heightened worldwide uncertainties following the Global Financial Crisis (GFC) in 2008. The region’s sturdy economic, demographic and political landscape provides risk mitigating and diversification benefits and a strong anchor to real asset values over the longer term.


APAC Tomorrows world Figure 1


APAC Tomorrows World Figure 2


An allocation into the Asia Pacific region may allow investors to enhance value to their global portfolio through regional diversification and enjoy additional benefits from variances across cities within the region. While there are many common threads running through some of the most prominent and resilient regional cities, domestic biases are also more pronounced across Asia Pacific than in the United States or Europe. This allows global investors to tap into more diverse opportunities which further improve total portfolio risk-adjusted returns.

It is the smart selection of cities, which are considered secularly resilient and sustainable from an economic and environmental perspective, that may help deliver attractive long‑term and stable core returns. Top urban success stories in tomorrow’s world are likely to come from Asia Pacific cities that are backed by supportive structural megatrends and also encapsulate the right DNA.

Picking the right cities with their own unique DNA, for example ‘lifestyle leaders’, ‘millennial magnets’, or ‘education elitists’, overlaid with an in-depth understanding of local micro-market dynamics, has shown to deliver outperformance in the long run. Our proprietary global cities filtering model that considers a list of both hard and soft factors, provides helpful insights to unlocking winning markets in successful cities both today and in the future.

Beyond the ‘traditional’ core markets, there are also strong merits to allocating and investing into ‘alternatives’ to ‘future-proof’ a broader portfolio. For example, many Chinese cities are not obvious targets for core investors, however these are developing at a rapid pace and should be closely monitored for future investability. After all, growth cities of today are the core cities of tomorrow’s world. Not only do they enhance returns through better-than-average growth, but also through structural repricing as they become more institutional, liquid and transparent. Similar propositions can be made for alternatives sectors, such as student and senior housing, and luxury outlets in some markets in order to ride developed or emerging demographic trends. There is a strong case to be made for a core proposition in Asia Pacific and we believe now is the time to ride the bandwagon.


Read full report

Contact us
Our offices
London skyline
201 Bishopsgate, London, United Kingdom

Issued by Nuveen Real Estate Management Limited, 201 Bishopsgate, EC2M 3BN. Authorised and regulated by the Financial Conduct Authority. Nuveen Real Estate is a name under which Nuveen Real Estate Management Limited provides investment products and services. Nuveen Real Estate is an investment affiliate of Nuveen, LLC (“Nuveen”), the investment management arm of TIAA.

This material is provided for informational or educational purposes only and does not constitute a solicitation of any securities in any jurisdiction in which such solicitation is unlawful or to any person to whom it is unlawful. Moreover, it neither constitutes an offer to enter into an investment agreement with the recipient of this document nor an invitation to respond to it by making an offer to enter into an investment agreement. 

This material may contain “forward-looking” information that is not purely historical in nature. Such information may include projections, forecasts, estimates of yields or returns, and proposed or expected portfolio composition. Moreover, certain historical performance information of other investment vehicles or composite accounts managed by Nuveen may be included in this material and such performance information is presented by way of example only. No representation is made that the performance presented will be achieved, or that every assumption made in achieving, calculating or presenting either the forward-looking information or the historical performance information herein has been considered or stated in preparing this material. Any changes to assumptions that may have been made in preparing this material could have a material impact on the investment returns that are presented herein by way of example.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Nuveen to be reliable, and not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. Company name is only for explanatory purposes and does not constitute as investment advice and is subject to change. Any investments named within this material may not necessarily be held in any funds/accounts managed by Nuveen. Reliance upon information in this material is at the sole discretion of the reader. Views of the author may not necessarily reflect the view s of Nuveen as a whole or any part thereof. 

Past performance is not a guide to future performance
. Investment involves risk, including loss of principal. The value of investments and the income from them can fall as well as rise and is not guaranteed. Changes in the rates of exchange between currencies may cause the value of investments to fluctuate.

This information does not constitute investment research as defined under MiFID.