Most of the demand drivers for the alternative sectors are no different from those globally although they certainly may be amplified in the APAC region. Take just two broad trends for example: ageing of the population (a key driver for senior housing and healthcare assets) and also technology adoption/internet usage (which drives the need for data centers among other assets). According to Oxford Economics, several major markets in APAC will see a big rise in the share of their populations aged over 65 in the coming decade. The number of internet users is also expected to rise rapidly across APAC, especially in China, which will see internet users per 100 people grow from 54.7 in 2017 to 68.9 in 2027.
Data points through end of November 2018. Change represents month-over-month change.
A noteworthy sector of focus within APAC alternatives is Australian healthcare property, which has consistently outperformed the Australian All Property Index since June 2008. The sector’s reputation of being more cycle resistant was further cemented when its total returns remained positive even during the GFC, with a still-decent total return of 7.1% in the year to December 2009. In the year to end 2017, the healthcare property sector in Australia delivered a strong 22.1% total return, with 7.6% from the income return. This outperformed the main Australian sectors of office, retail and industrial, which returned 13.4%, 10%, and 10.9% respectively. Although the return has recently dropped, the Australia healthcare property sector still had strong returns of 11.9% in the year to June 2018 and a 10-year average return of 13.7%.
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