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Friday, 15 December 2017

Why should I invest in Asian real estate?

Six prominent countries in the region: China, India, Indonesia, Thailand, Philippines, and Vietnam, will see a migration of 300 million people into cities over the next decade, accompanied by a growth in the middle class. China itself is experiencing a monumental increase in its middle-class population with 76% percent expected to make up China’s urban population by 2022. To put that into perspective, this will amount to 550 million people, making China’s middle class alone large enough to be the third most populous country in the world.

According to the World Economic Forum, India’s middle class will be larger than China’s by 2027. Think tank Brookings Institute suggests that by 2030, two-thirds of the global middle class will be living in Asia. This translates to a staggering increase in demand for housing, offices, factories, shops and a wealth of other public facilities and infrastructure types. About 67 billion square feet of housing will need to be but to accommodate these rural-urban migrants. This is equivalent to building 28 Londons over the next decade!
China’s credit situation has been a cause for alarm with the country’s debt as a percentage of economic output increasing from 160 to 280 percent by the end of 2016. However, this is not a reason to panic or avoid Chinese investments entirely. China’s corporate debt burden is well understood by the government with Chinese banks being adequately capitalized to withstand the negative impacts of non-performing loans.

The Asian real estate market has clear potential growth and gives greater diversification than holding a mix of equities, fixed interest, and cash and reduces the risk of narrowly based

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