In brief
- The Asia-Pacific living sector is broadening beyond Japan's multi-family sector to include diverse markets and accommodation options.
- This trend is driven by demographic shifts, structural supply shortages and increased cross-border movement.
- While nascent, the sector is characterized by a core level of risk, low return correlations both within and across regions, and increased institutionalization.
- As such, the Asia-Pacific living sector provides attractive prospects for long-term growth and an enhanced risk-adjusted return profile within a global real estate portfolio.
Traditionally dominated by Japan's multi-family market, the Asia-Pacific living sector is broadening to include a wider range of markets and accommodation options. In Australia, the build-to-rent sector is rapidly growing, while hybrid rental housing forms like co-living and student accommodation are gaining traction. Similarly, while Japan's conventional multi-family sector remains attractive due to positive fundamentals, short-stay rental options and co-living are emerging as new market segments.
These trends are supported by demographic shifts, structural supply shortages, unaffordability of home purchases, and increased cross-border movement. This paper explores these tailwinds in detail and how they can create new opportunities for enhanced risk-adjusted returns, resiliency, and increased diversification in a global real estate portfolio.