The chaos of the 24 hour news cycle makes life difficult for real estate investors. There is a constant press of information, all reported immediately and as if it was the most crucial item for your attention. Until, of course, the next thing appears.

With President Trump in the Oval Office, this news noise has become even more deafening. Every move by the new president, whether it is concrete policy or simply an opening bid in negotiations, is reported with the same weight.

In such an environment, it pays investors to look beyond the news of the hour or the day or the week towards a longer-term future. In Asia, there are crucial megatrends which persist regardless of geopolitical upset – what used to be referred to as ‘the Asian Growth Story”. One of the key trends for real estate is the continued growth of the middle classes around the region.

When families join the middle classes, they have more income to spend on housing, education, healthcare, shopping and leisure. All of this boosts real estate across a range of sectors. Even the office sector will benefit as more people move into white collar jobs in the service industries.

Recently, Oxford Economics published a report entitled The Future of the Middle Class in Emerging Markets, which predicts that the emerging market middle class population (defined as households with annual income between $20,000 and $70,000) will double to nearly 700 million over the next decade. And the vast majority of this growth will happen in Asia.

China will account for nearly half of the coming rise in middle class numbers, followed by India, where the class is smaller but growing more rapidly. Meanwhile Indonesia, the Philippines and Vietnam are predicted to show strong growth from a smaller base.

All of this is good news for real estate investors. Oxford Economics data also shows how certain cities, such as Tier One cities in India and China offer large and growing middle class populations due to rising wealth and continued urbanisation. Meanwhile, smaller markets such as Malaysia and Thailand might not have dramatic growth but they have a richer population on average.

What is striking about this research is that it shows opportunities driven by the growing wealth of the middle classes across the region. China’s growth story is not over, India’s has hardly begun and smaller markets have much to offer. Don’t forget nations like Indonesia, a large nation with a small institutional real estate market. Yet Indonesia’s middle class will be larger than that of Russia or Turkey by 2029.

Asia’s booming middle class will unlock opportunities for real estate investors in many cities and across all sectors, so take a step back from the short-term furore and look to a more prosperous future!

Further reading:
The Future of the Middle Class in Emerging Markets

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Simon Smith