The Asia Pacific Real Estate Association (APREA) is predicting that the region’s structural megatrends that will outlive the pandemic and that despite the turmoil caused by the global COVID-19 pandemic, Asia remains the locus of future global growth and is expected to have the largest economy in the world by 2030.
Asia’s economic transformation over the past 60 years has been unprecedented with the 21st century being described as the ‘Asian Century.’ Driven by demographic trends, Asia Pacific urbanization is an epic boom that is driving the growth of a middle class and, with it, a cycle of rising consumption.
APREA quotes a report by the Asian Development Bank, which estimates that the region will need to invest $26 trillion USD between 2016 and 2030 to maintain its growth momentum, respond to climate change, and eradicate poverty. The ADB says the region should be spending an average of US$1.7 trillion USD a year until the end of this decade but is currently only around $900 million USD annually.
John Lim, Chairman of APREA and Co-founder and Deputy Chairman of ARA Asset Management Limited, said: “Infrastructure is ultimately what translates the impact of urbanization into benefits for real estate. With the requirements needed by the rapidly developing economies that will eventually host more than half of the world’s megacities, investment in infrastructure development in the Asia Pacific is a cycle that will be played out over decades.”
Lim adds that, “Infrastructure requirements are expected to increase exponentially, thus enabling financing of these projects to gain traction, and there will be opportunities for the private sector to participate as many of the infrastructure initiatives align with ESG allocations, re-development, connectivity, and economic growth.”
Sigrid Zialcita, Chief Executive Officer of APREA said: “As it stands, Southeast Asia’s $2.4 trillion economy is the seventh-largest in the world and is forecast to jump to fourth largest in Asia Pacific by 2050. Its workforce will grow by a further 60 million while its urban population is expected to rise by an additional 90 million by 2030. The reality is that ASEAN needs infrastructure development if it wants to sustain its economic growth.”
APREA’s Lim said that Southeast Asia’s economic ambitions will provide the necessary impetus for infrastructure spending and lift it out of the coronavirus slump and that by 2030 seven of the world’s 10 largest megacities will be in the Asia Pacific.
He said that, “The benefits of investing in institutionalized assets will be more evident as the world inches towards a post-pandemic future. Allocations to the region from global investors can only continue to rise and the securitization of the very assets so critical in driving its growth will be a massive investment opportunity. Asia Pacific remains primed to take advantage of this revolution in real assets. APREA’s goal is to pave the way for the advancement of investment opportunities into the region’s real assets.”