Global predictions imply that economic growth will slow this year due to war, inflation, and increasing interest rates. In the Asia Pacific region, most central banks are trying to avert inflation by strengthening monetary policies. Many believe that a recession can still be adverted, APAC is in a better position globally, where milder inflation and more robust GDP growth continue. Private real estate is well positioned with healthy fundamentals to support stable income going into 2H 2023.
This year, the multifamily housing sector has continued to witness several important trends that investors should closely monitor. Firstly, there be a on-going surge in demand for affordable and workforce housing. As housing affordability remains a pressing issue in many urban areas, PERE firms are increasingly targeting investments in multifamily properties that cater to middle-income and lower-income households. These investments can provide stable cash flow and potential long-term appreciation, driven by the growing need for affordable housing solutions.
In this article, we highlight some of the key trends for 2023 – 2024, with a notable rise in the popularity of alternative investments in the real estate sector. Among these, multi-family real estate and other private equity investments are gaining significant traction.
Let us dig deeper into last year’s data to fathom which private equity real estate (PERE) trends we are continuing to see.
Japan’s real estate market has been attracting attention from international investors, and the multi-family sector, in particular, is gaining momentum. The country’s ageing population and rising trend of urbanisation have contributed to the growing demand for rental housing. Investors recognise the potential of Japan’s multi-family investment properties as stable income generators and long-term value assets. Additionally, favourable regulations and government initiatives to encourage foreign investment make Japan an attractive market for PERE players.
Beyond Japan, multi-family investment properties especially in the US remain a preferred asset class for PERE investors worldwide. Changing demographics, such as the rising number of millennials and the growing preference for urban living, have fueled the demand for rental housing in various markets. The flexibility and affordability offered by multi-family properties make them an appealing choice for both investors and tenants. As urbanisation continues to reshape cities globally, investing in multi-family properties presents a promising opportunity for generating consistent cash flow and potential capital appreciation.
Private equity has established itself as a thriving hub for investments in countries like Japan, the United Kingdom (UK), and the United States (US). Each region offers unique opportunities and attractive investment environments for private equity in Singapore firms and investors.
Japan has experienced a significant rise in private equity activity in recent years. With a strong economy, a stable political environment, and a large pool of well-established companies, Japan presents opportunities for, growth capital and buyout investments.
UK’s well-developed financial infrastructure, favourable regulatory environment, and access to global markets make it an appealing destination for private equity firms seeking to deploy capital. London, in particular, serves as a financial centre that attracts both domestic and international private equity players.
The US stands as the largest and most mature private equity market globally. The country’s entrepreneurial culture, technological advancements, and access to skilled labour contribute to a thriving ecosystem for private equity firms.
The traditional avenues of real estate investment are transforming, with alternative investment options gaining traction within the PERE sector. These alternative investments include niche asset classes such as student housing, co-working spaces, data centres, healthcare facilities and logistics. Investors will prioritise prime logistics in trade centres and e-commerce countries, a sector currently experiencing historically low level vacancy rates in the UK, US, Germany, Netherlands, France & Spain. As technology continues to reshape various industries, the demand for specialised real estate assets is rising. Investors are increasingly diversifying their portfolios by venturing into these alternative sectors, which offer attractive risk-reward profiles and the potential for high returns.
Technology is revolutionising how we live, work, and invest.
The real estate investment industry is no exception, as emerging technologies such as artificial intelligence, blockchain, and virtual reality are transforming various sectors. PERE investors recognise the importance of adopting technology-driven solutions for efficient property management, market analysis, and investment decision-making. Embracing these advancements enables investors to stay ahead of the curve, optimise operational efficiency, and enhance investment performance.
The 2023 private equity trends are slowly revealing themselves, but many also fear what the unfamiliar ones may hold. Here at QIP, we know how to identify the best alternative investment opportunities for our clients.. Our real estate investment approach and expertise in residential housing guarantees vigorous deal flow and execution capabilities. And our track record can attest to our strong performance in the industry. Give us a call to learn more about us!