As leader of one of the world’s largest conglomerates making everything from aircraft engines to cyber security software, General Electric CEO Jeffrey Immelt knows a thing or two about robots. In fact, he believes they’ll bring an end to the days of “wage arbitrage”, where high cost jobs are exported to lower cost countries.
The reason is that robots cost the same wherever they’re used, so if robots are making things rather than people, why not reduce transportation time and logistics costs by locating production close to the customer? This insight was one of many unveiled at the Asia Pacific Real Estate Association (APREA) Property Leaders Summit in Hong Kong recently. For property investors, this has big implications.
APREA has done a tremendous job encouraging best practices in corporate governance and transparency among REITs in Asia, working closely with governments to open up and expand their respective real estate markets. The chart below shows how well this message has been received. In the last 15 years the market capitalisation of the Asian REIT market has grown at 35% per annum and stood at A$220bn at the end of 2015. In comparison, over the same period the Australian AREIT sector has grown at 7.6% a year with a total market capitalisation of A$117 bn (at end 2015).