Equity markets are rather prone to the jitters of course; not that long ago, with prospects of a US-China trade deal looking reasonable, the equity market view seemed to be that all manner of things were going to be well. A shift from jaw-jaw to war-war and the markets are now predicting endless night.

Real estate has been affected. Savills office data for the first quarter shows falling rents and capital values in both Shanghai and Beijing, which is not good news. Other Chinese cities are suffering too.

Nonetheless, for investors in Asia Pacific real estate, there are reasons to be cheerful about geopolitics and the prospects for the region’s economy. Firstly, it is in nobody’s interest for the trade war to be prolonged. President Trump will soon be on the campaign trail and will want a deal to wave to voters. China’s leaders are not under the same democratic pressure, but they need unfettered access to US markets.

Secondly, China is no longer just a manufacturing and export-led economy. The Chinese consumer is a growing part of the economy as it rebalances. It is also important to note – and this is something which is not acknowledged often enough outside this region – China is becoming an innovation hub, with a host of new tech firms producing a myriad of products and services. Chinese companies filed 12,589 US patents last year, up 17% from 2017.

Finally, and most importantly, the Asia Pacific story is not simply China-plus, we have a host of growing economies in this region. In India, 600m people voted in a general election which returned Narendra Modi to government. This victory shows the Indian public backs Modi’s economic reforms, many of which will take time to bear fruit. India has enormous growth potential and is already a key destination for global real estate capital.

Developing nations such as Indonesia, Vietnam and the Philippines also have huge untapped potential and fantastic demographics. The combined population of these three nations is 470m and the median age is around 30 in Indonesia and Vietnam and only 24 in the Philippines.

Indonesia’s electorate granted Joko Widowi another term in May, so that is another victory for a business-friendly leader. Just as importantly, the first phase of Jakarta’s MRT system opened in March and with more infrastructure development to follow, the city will be more attractive to real estate investors.

Don’t forget Asia Pacific’s established markets either. Australia has elected a business-friendly government, while Japan recorded better-than-expected GDP growth in the first quarter of this year.

There is a lot of Asia Pacific outside China and a lot of it is doing well.

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Simon Smith