Panel, Conference Presentation
Global Real Estate: Repricing Risk, Rethinking Strategy | Asia Summit 2025
Milken InstituteCurtis S. Chin, Michelle Martin, Stuart Crow, Goodwin Gaw, Kishore Moorjani, Hsueh Ling Ng
- The real estate market is undergoing a "visible to invisible" transition where demand is shifting toward data centers, compute power, fiber connectivity, and battery storage, while traditional office sectors face uncertainty in the "foreseeable future."
- AI adoption is expected to reduce floor space requirements through efficiency gains, potentially displacing senior staff if "adult re-education" is not achieved, though AI-native companies may simultaneously drive demand for "cool offices" in tech hubs like San Francisco, Seattle, and Bellevue.
- JLL forecasts data centers will increase from "less than two or three percent" to a significantly larger share of deal numbers over the "next 10 years," creating a potential capital gap for the "huge surge in demand" that may strain bank exposures to data center construction costs.
- Logistics and industrial assets in India, Southeast Asia, and Korea are projected to remain "capital magnets" driven by supply chain redrawing, with Vietnam expected to build "20, 30 million square feet" of factories annually to accommodate manufacturing moving from southern China.
- Goodwin anticipates Hong Kong will be the key investment theme for the "next 18 months," positioning it as China's "window to the world" and expecting Chinese tech companies to announce asset purchases within "the next four weeks."
- Strong rental growth is forecast for Japan in the "next 12 or 18 months" due to supply shortages, while Tokyo rents may revert up by 10% to 15% in renewal cycles, contrasting with Hong Kong rents which have fallen 35% to 40% and continue to decline.
- Sydney is expected to have reached a market "trough" with rising rents, whereas Melbourne's office market remains challenged, and investors are increasingly focusing on income stability and "reliability of income" from the living sector for pension and insurance capital.
- A "China Plus One" strategy is creating opportunities for manufacturers to expand in Mexico and Turkey, with Turkey targeting European and emerging African markets and Mexico serving the US, while investors allocate a risk premium to the US due to geopolitical perception shifts.
- Private wealth access to real estate is expanding via technology, particularly in the "build to rent" living sector driven by urbanization, while private credit and local currency debt products are expected to resonate with retirement capital seeking consistent yields.
- Tokenization or fractionalization of iconic assets is anticipated to become an "attractive alternative" if it offers corporate governance similar to REITs, potentially allowing retail investors to purchase assets like Raffles Hotel through crypto exchanges or low-cost brokerages.
- Financial risks include the "rubbish in rubbish out" problem from unmonitored AI leading to poor portfolio decisions, refinancing difficulties in offshore China and tough financing in Hong Kong due to falling values, and a funding gap in the Korean logistics development market.
- Luxury residential, experiential hospitality, and high-end retail are viewed as "impossible-to-replace" assets that will retain value as AI creates more wealth, while the shift toward campus-style offices is considered incorrect as workers return to city centers for lifestyle amenities.
- Technology trends observed in mature Western markets, such as internet and phone adoption, are expected to occur in Asian operating real estate markets, and younger generations may prefer financial hybrid products over traditional real estate due to liquidity concerns.
- Goodwin identifies "high-risk, high-return strategies" in regionalized supply chains as opportunities, while investors are warned to be "extra, extra cautious" in the logistics and debt sectors as many participants enter these areas simultaneously.
- The office sector is currently "hated across the board," but strategic entry is seen as potentially rewarding with a recovery parallel to 1995, while AI tools like Agentic AI can reduce the time to generate complex office location reports from weeks to "about 21 minutes."