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00:00We've been talking about the outlook for interest rates. It's no longer clear what the Fed might do
00:05in December. What assumptions are you making and how might that impact sentiment in the property
00:11space? Thank you very much for having me on. I've learned for quite a long time now not to make
00:20assumptions about interest rates. But I think our feeling is that should the Fed reduce rates,
00:29which is definitely a discussion point at the moment. That should only increase the amount of
00:37outbound investment we've been seeing from the U.S. over the last six months. $23 billion in quarter three
00:46came out of the U.S., 12 of which landed in the Asia markets. So that attraction
00:58to the sort of hot stocks at the moment, whether that be living sectors, logistics or data centers,
01:10we see only increasing. It's not just the Fed uncertainties, also tariff uncertainty. In terms
01:18of reallocation of funds, fund flows, you talk about how a lot of them are actually headed to Asia.
01:24How about markets like, you know, U.K., Germany, France? How are they? How are they? How attractive
01:30are they right now? Well, the U.K. is still, and particularly London, probably the greatest
01:38receiver of cross-border capital. Europe has been very attractive over the last six, nine months,
01:45probably ahead of that's mainland Europe, ahead of some other markets because of the steady reduction
01:53in rates that we've seen there. But, you know, across the board, you know, quarter three saw a 32%
02:01rise in cross-border capital. And one of the most significant receivers of that was Asia, you know,
02:10$64 billion in Q3, a 57% uptick year on year. But one of the really interesting pieces of that spend was that,
02:24you know, a real significant amount of that was actually Asian capital remaining in Asia. So we've seen that tariff
02:34uncertainty. But, you know, it's very clear to me that we're starting to see a recovery from the
02:43buffeting that we took back following Liberation Day. And the, you know, corporate real estate sentiment
02:51is better now than it's been since quarter three 2022. Which markets in Asia in particular
03:01are attracting global capital? Some point to Japan where it's stable, it's transparent,
03:08it's liquid. How are you assessing that market? Stable, transparent, liquid. Those are three words I
03:15would definitely use. I mean, you know, Japan is a safe haven market, you know, really attractive.
03:26We've seen, you know, Bloomberg's recent transaction at Tokyo Garden, $2.6 billion,
03:34the largest investment by a foreign buyer. But across, I mean, Asia, I would like to say,
03:42is a real all-rounder. It's, you know, manufacturing base, it's significant adoption of technology.
03:50And, you know, the significant rise in its consumer base, particularly between now and 2030,
03:58makes it a hugely attractive market. And those locations that people are focused on,
04:05particularly for commercial property, are Tokyo, Seoul. Australia is attracting a lot of interest.
04:13Singapore, obviously, will continue to do so. And the market, which I believe is very interesting
04:21and is mentioned consistently with investors that we're speaking to at the moment is India.
04:28What about India? Well, you know, India's probably been the biggest winner in the sort of China,
04:44plus many locations, some of the diversification away from that market. And India has developed
04:49itself not just into probably one of the largest office markets in the world for, you know, quality
04:56space. But it's become a real manufacturing base as well. The, you know, abundance of talent,
05:03we all know the story and the size of that market is making it a market that people want to look at
05:12very closely. But it's a complicated market. And, you know, we're advising many investors
05:23who are looking at that market now. And, you know, particularly there's great opportunity to
05:30partner with local investment and local developers.
05:35William, our previous guest talked about reshoring. It does seem like India is benefiting from
05:42reshoring, manufacturing, you know, gravitating away from China perhaps more to the country.
05:48Is that what you're seeing as well? In terms of capital flow, are you seeing capital flowing away
05:53from China into India perhaps? Well, you're seeing capital flow into India. You're seeing it flow into
06:00Japan and into two other areas. The extraordinary sort of expansion of, you know, global capability
06:13centres across Mumbai, Bangalore, Delhi, Hyderabad, you know, has seen, you know, a take up in offices
06:22last year of approximately 70 million square feet. We expect that to be, you know, nearer to or exceed 80
06:29million square foot this year. So that type of activity by really high quality global, a global
06:38occupier base is going to drive development, not just in grade A offices, which clearly
06:46is a significant focus, but now the increased activity in industrial logistics and data centres
06:53in India is significant. And that's going to drive and pull investment into the region.
07:01Right. So I'm just wondering, when you talk about, you know, the appetite for office and logistics space
07:05in India, that shows perhaps the long term confidence in the country. After all, you know,
07:10at 7.8% currently and expected to grow even more in terms of GDP, that suddenly
07:18is an attractive pool for Indian in the Indian market. Yeah. And the confidence in the Indian
07:26market from investors is is based on, you know, probably one of the largest and best educated,
07:34you know, talent pool in the world. And so, you know, occupiers, large corporates know that,
07:45you know, they can, you know, long gone are the days of, you know, the BPO's who moved out of India.
07:56Now it's about innovation and your real front office work.
08:03William, we've also been talking about wealth creation in the region. We're seeing,
08:07you know, massive IPOs in Hong Kong, for instance. We're seeing massive wealth growth
08:12in markets like China. Talk to us about the luxury residential market. How is that looking right now?
08:21Well, you know, residential markets around the world are patchy. We only saw, what, 3.6%
08:28across Asia last year. But, you know, particular highlights were Seoul, Tokyo and Dubai over the
08:36last five years. I think, you know, those prices raised 25%, 16% and 15% respectively. Tokyo actually
08:45over a five-year period is probably the greatest winner in that game. But why are people investing
08:54in residential in the way that they are? Well, look, it's diversification. We've seen significant
09:01wealth growth, as you say. And the first target of ultra high net worth individuals tends to be
09:11to residential. And we've seen a lot of that sort of lifestyle investment over the past 12 months.
09:20And we think that, you know, that will continue. It's a market, though, in some areas of the world,
09:27it's been challenged. We know that, you know, for example, in London, the prime and super prime markets
09:36are under pressure. But that is about policy. We've seen in Seoul itself, we've seen some cooling
09:44measures take off. But, you know, some really interesting secondary markets have emerged.
09:48Manila, for example, Christchurch is attracting a lot of interest. New Zealand, again, because of policy
09:57change and the abilities, the change in the ability of foreigners to buy in that country will,
10:02without doubt, create interest. And we're a big believer in the Asian residential market. You know,
10:0812 months ago, we bought a business called McGrath in Australia, partnered with Bailey's out of New
10:16Zealand. So we believe that it's got real opportunity over the next 18 months.
10:23So are you looking for more purchases in the next 12, 24 months? What's looking attractive?
10:28Where are you in talks with?
10:33Well, at the moment, I think we're going to settle down the business that we've got in terms of
10:39Australia. Australia, we think, is a really interesting
10:43marketing market. We're looking very closely at some fantastic opportunities here in Tokyo.
10:51We've got, you know, a great business in Hong Kong. We're looking, you know, across the region,
10:56particularly, you know, the growth of private capital, the sophistication of private capital is
11:03probably the biggest story of the last 10 years in real estate. And that's something because of our
11:10high-end luxury residential business, we're very tapped into. So, you know, looking at where,
11:19you know, capital flows are, where private wealth is concentrating is always high on our list.
11:27If you take a look at the market right now, William, everything is priced for perfection.
11:33Expectations are that the Fed will continue to cut. I'm just wondering how you're assessing the risk
11:40from those expectations. Might that derail some of the assumptions that you're making right now?
11:48Look, I mean, I said at the beginning, you know, we're in a dangerous world for assumptions.
11:53You know, when, you know, I was here this time last year, and we were beginning to see the early signs of
12:02green shoots in markets across the world as we are now. And then we had the effects of the tariffs hit our global markets and create significant uncertainty.
12:14And we seem to be in a world where these types of events are hitting us more often.
12:22But, you know, there are some parts of our markets which I believe will, you know,
12:27the markets are solid at the moment. People are set. The confidence in investors, people are seeing
12:35uncertainty as an opportunity rather than a reason not to invest. We've seen a change in the way,
12:43you know, there was a concern basically over the last three to five years about, you know, that weight
12:50of debt in the market. We're seeing banks take a different attitude now than they perhaps did 12
12:55months ago. We're seeing far more incentivized sellers in the market. And so the capital that's
13:01been out there for some time now is beginning to see more opportunity and that volatility will create
13:09more opportunity. But what's the biggest risk out there then? I mean, if you speak to the IMF,
13:18it would tell you about the surging debt level. Yeah, well, look, I think that that's something
13:26we've got to keep a close eye on, without a doubt. You know, it's quite a high, it's a topic which is
13:34getting a lot of air time, particularly in the US. So, you know, that's something that we will be watching.
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