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In the real estate market, the living sectors have become a dominant force, commanding the largest share of global transaction volumes last year. Investments in multifamily, Build-to-Rent (BTR), student accommodation, co-living, and senior living have grown. Countries like Japan, China, and Australia are leading this growth, although challenges such as escalating construction costs and regulatory complexities remain. The living sector's resilience and potential for stable returns continue to attract significant investor interest, setting the stage for opportunities in the coming decade.

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Asian Real Estate Securities continue to oscillate in 2024 as rates expectations drive performance of REITs, Developers, and Asian currencies. One positive note is that globally fund managers are said to be the most underweight the real estate sector they have been since 2009, a year when entering the sector delivered several consecutive years of strong absolute and relative performance. Despite increases in yields and hawkish comments from Fed officials, the corrections have been shallow and on low volumes. MSCI changes which resulted in the deletion of several Asian REITs from their index had been an overhang and that was removed at month-end, enabling us to potentially see some improvements after well-flagged deletions led to underperformance as passive funds were sellers. We added to positions that were impacted as a result of these changes. Sentiment in the near term will likely be dictated by US employment data to be released at the end of the first week of June. Last month’s report showed an increase in the unemployment rate so any continuation of this trend may shift rate expectations yet again which would be positive for Asian REITs and currencies. Large discretionary consumer companies in the US have noted that lower-income consumers have been notably weaker, possibly as pandemic savings have been run down and higher costs crimp disposable income. Results and guidance behind us, the drivers for REITs and Developers are likely to be macro, but we could also start to see some uptick in corporate activity and buyback announcements.