Senin, 04/07/2011

Glenn J. Rufrano: “Emerging Market Trend Likely to Attract Investors to Jakarta”

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Glenn J. Rufrano: “Emerging Market Trend Likely to Attract Investors to Jakarta”

LAST MONTH Glenn J. Rufrano, President and CEO of Cushman & Wakefield Inc., visited Jakarta where he gave a talk about the prospects of property investments in Asia Pacific. In his view, the Asia Pacific property industry will continue shining in the coming several years. In a number of Asia Pacific countries the property market is growing quite rapidly, according to Rufrano. In order to know more about the potentials of the Asia Pacific property market and what the Indonesian government should do to enable the country to catch up with other parts of Asia Pacific whose property industry is better developed, Deddy H. Pakpahan interviewed Glenn J. Rufrano. Below are excerpts of the interview.

What is your overall view of the property market growth in Asia Pacific in 2010 and what is your prediction of the market trend up to the end of 2011?

2010 turned out to be a very good year for the entire Asia Pacific region, surpassing most of our expectations. It was a year that validated the property market’s turnaround, and brought the region to the forefront of the global stage. Demand boosted take-up – feeding into declining vacancies for most markets, and helping rents rise in most cases.

Commercial real estate values – depending on geography – have either bottomed out or have started to rise again. For two years running the Asia Pacific region has accounted for more than half of all global activity So far, the year is off to a good start. Supportive economic fundamentals are continuing to stoke the region’s property markets.

Demand for all types of real estate remains strong. With the positive momentum in the regional economy expected through the balance of the year, we can expect property markets in the region to continue to strengthen this year, building on footholds established last year and in the first quarter. Vacancies for commercial properties will generally be on a downward trajectory while rents and property values in most markets will continue their uptrend.

The latest research conducted by Cushman & Wakefield Inc. said that the year 2010 was the return point toward the awakening of the Asia Pacific property industry and that trend would continue up to the end of this year. In your view, which countries in Asia Pacific will take advantage of the awakening momentum and profit from it? Could you explain why?

Generally, we expect the property market in the region to continue to benefit from a broad-based economic improvement. We are exceptionally bullish with Singapore, Hong Kong, China and Australia. These export-driven economies will get a lift from rising demand from Western economies and within the Asia Pacific region. We also expect private consumption to be a key growth driver in these countries, as a tighter labor market begets higher wages and elevated property prices produce wealth effects. This strong economic backdrop will be the cornerstone of continued growth in the property market. We also think that Tokyo presents some buying opportunities for commercial real estate, especially as the reconstruction begins to take hold.

The same research said that property investments in Asia Pacific rose 14% in Q1-2011 compared to the same period of last year. What is the total value of property investments in Asia Pacific in Q1-2011? And will the investment value increase by the end of 2011? If yes, how many percent higher than the 2010 level?

Investment sales in Asia Pacific totaled US$107.5 billion in the first quarter, accounting for nearly 50% of total global investment volume. In 2007, which was the market peak, the region only accounted for over 20%. If the first quarter trend holds, total investment volume this year stands to rise at least another 20% from 2010.

Which countries in Asia Pacific are now the destinations of global investors?

Core markets of Singapore, Shanghai, Beijing, Sydney and Melbourne in Australia, Tokyo, and Hong Kong remain top picks for global investors. Interest in these gateway markets has remained high due to relatively stable yields and strong rental growth particularly in Hong Kong and Singapore. As an example, Cushman & Wakefield was recently involved in the sale of Capital Square in Singapore for approximately US$730 million, the largest sale in Singapore year to date and one of the largest ever in Asia Pacific – a clear signal of perceived strength for the market. China has also been a preferred investment destination ever since it has opened up; the country’s immense growth and continued strong prospects are luring investors to acquire real estate.

Association of Foreign Investors in Real Estate (AFIRE) placed Vietnam in fourth position after Brazil, China and India as investment destinations with high potentials. But, as we have come to know it, global investors are still facing some constraints to invest their capital in Asian countries. Example, in China foreigners are no longer allowed to build villas. In Vietnam there are rules and regulations which limit foreign investments. And in Indonesia, the government has not yet issued policies on property ownership for foreigners. What is your comment on this matter and what should governments in Asia do to support property market growth in their countries?

Undeniably, property markets have the potential to strengthen a country’s economic edifice, and foreign direct investment in property markets in emerging countries would help promote growth as we have seen in established markets. But the flow will certainly depend on the country’s investment climate and transparency. Governments would need to make it easy for investors to navigate the environment they would operate – as they enter and exit markets.

The results of the research on property investments in Asia Pacific that were released by Cushman & Wakefield did not make any mention of the Indonesian or the Jakarta City market. Was it because their market share was too small? Could you explain about this?

Jakarta was excluded from the report as we are still in the process of building our transactions database in that market. We will initiate coverage once we have enough data to make an in-depth market assessment.

As regards Indonesia, which is an archipelagic country (we have more than 17,500 islands with a total population of 235 million people), how do you view Indonesia’s potentials in the regional and global property markets?

Recognizing the prospects for continued growth in both population size and wealth demographics in most of major cities in Indonesia, we will see further growth in the landed housing and retail sectors; thus, we are expected to see more foreign or local investment entering the markets. An emerging market trend is likely to attract foreign investors to commercial investments in Jakarta, Kuala Lumpur and India by year-end. With its tropical weather, cultural diversity and natural beauty, Indonesia continues to offer delightful experience for foreign leisure travelers.

One example is Bali which is one of top tourist destinations in the world – and remains the most favorite location for leisure/hospitality related property investment in Indonesia. Office or other type of commercial development will still be concentrated within major business cities in Indonesia, such as Jakarta, Surabaya, Medan and Makassar.

What should the Indonesian government do to boost its property industry? Should it open the door for foreigners to own property in the country?

While foreigner property ownership may be important, adequate infrastructure is far more essential, as Indonesia has a huge potential for industrial/manufacturing investment with its large consumer base and strategic location in the region. The government should provide infrastructures such as reliable power supply, ports (seaport/airport), roads, which are keys to the industrial investment. The success of this investment will boost demand for property: from basic needs like housing to property investment likes office spaces, condominiums and hotels. (DHP)

 

About Glen J. Rufrano

Glenn J. Rufrano was named President and Chief Executive Officer of Cushman & Wakefield Inc. in February 2010. He is also a member of its Board of Directors. Glenn was formerly Chief Executive Officer of Centro Properties Group (ASX:CNP) and a member of its Executive Committee. From April 2007 through January 2008, he served as Chief Executive Officer of Centro Properties Group US. In this role, he was responsible for the management, leasing, redevelopment and development of Centro Properties Group’s US portfolio.

Until its acquisition by Centro Properties Group in April 2007, Mr. Rufrano was Chief Executive Officer of New Plan Excel Realty Trust, Inc., as well as a member of the Company’s Board of Directors. Under his leadership, New Plan was transformed into one of the nation’s largest public real estate companies, focusing on the ownership and management of more than 460 community and neighborhood shopping centers encompassing approximately 68 million square feet of retail space.

Mr. Rufrano has been involved in both the shopping center and mall industries for more than 25 years. Mr. Rufrano joined New Plan Excel Realty Trust in February 2000, following seventeen years as a partner at The O’Connor Group, a diversified real estate investment firm. At The O’Connor Group, he most recently served as President and Chief Operating Officer, overseeing the investment and management of three private equity funds, in addition to client service/marketing and finance activities. Concurrently, he was Co-Chairman of The Peabody Group, an association between The O’Connor Group and J.P. Morgan & Co., Inc. investing in high-yield international real estate related opportunities.

Mr. Rufrano currently serves on a number of boards at New York University’s Real Estate Institute, where he is an adjunct professor, and is a trustee and member of the Executive Committee of the International Council of Shopping Centers. Mr. Rufrano is also on the Board of Directors of New Alternatives for Children, a not-for-profit health and social services agency whose exclusive mission is to serve children with medical disabilities and/or chronic illnesses and their families.