Principal Asset Management Sees Growth in Asia-Pacific Commercial Real Estate

Asia-Pacific commercial real estate offers opportunities for investors seeking stronger income growth and portfolio diversification, according to Principal Asset Management.

The US-based investment manager plans to increase its activity in regional commercial property markets, where investors remain relatively underweight in office assets.

Richard Hill, senior managing director and head of global real estate research and strategy, said higher interest rates were encouraging investors to seek faster-growing property markets to offset financing costs.

Investors are also expanding their search beyond established markets and conventional property types.

Development and redevelopment projects could offer opportunities to generate stronger net operating income growth, Hill said.

Principal intends to maintain exposure to the US property market, which remains too large for global investors to overlook.

Its parent company, Principal Financial Group, reported USD808bn in assets under management during the second quarter.

The strategy highlights continued investor interest in Asia-Pacific commercial real estate, despite higher financing costs.