ARA Asset Management Limited is a premier global integrated real assets fund manager. As at end-June 2018, the Gross Assets Managed by ARA Group and its Associates was approximately S$78.2 billion across 62 cities in 20 countries. In this interview, John Lim, Group CEO, discusses the potential of the ASEAN region, the adoption of industry 4.0 tech in the real estate sector, and ARA’s vision to “be a global real assets fund manager”.
What are your expectations for ASEAN in the coming year as the region continues to enjoy a growing consumer market, substantial intra-regional trade volume, and continued investment inflows?
These are exciting times for the ASEAN region which embodies so many qualities, resources (human, natural resources) and positive energy. A diverse region with over 630 million people and varying economic and urbanization level, there is huge potential for future growth and development and so much that a young, hardworking ASEAN can do.
There are plenty of opportunities for investors of varying risk appetites – from developed Singapore to a developing Myanmar. The outlook remains optimistic as intra trade continues to support the growth in the region. Supported by strong socio and economic fundamentals - young population base, rising urbanization, rising disposable income, stable GDP growth, low inflation, strong investment spending - the opportunity for ASEAN remains optimistic in the mid- to longer-term. The region’s steady growth is fuelled by an increasingly well-educated workforce, a wealth of natural resources, rapid urbanization, growing infrastructure spending and its strategic location. Situated in the confluence of major trade routes, it sees US$5.3 trillion of global trade passing through each year.
How can Singapore’s chairmanship spur the development of the region?
Singapore’s chairmanship has spurred and will continue to spur the development of the region by integrating ASEAN as a region of seamless economic activity and growing opportunities supported by strong trading networks. Located at the heart of the region, Singapore plays an integral role in promoting the growth and wellbeing of this region.
A key area that I believe Singapore’s chairmanship can truly impact is Innovation and the Digital Economy. Singapore aims to promote innovation, build up digital connectivity, and facilitate e-commerce flows. By some estimates, the ASEAN digital economy has the potential to grow to US$200 billion by 2025, with e-commerce accounting for US$88 billion.
For the real estate sector, technological advancements have significantly transformed the landscape. Internet of things, big data, artificial intelligence, virtual reality and 3D printing, among other trends, are changing the way people work, live, and entertain, and more importantly, the way real estate caters to ever-changing trends. In particular, quality R&D facilities, modern logistics warehouses, data centres and cashier-less stores are well positioned to capitalize on the long-term secular trends.
What is your forecast for the South-East Asia real estate market and what will be the major growth drivers as the region faces rapid urbanization?
Over the long term, the SEA region remains positive on the backdrop of promising demographics and technological trends that underscore strong economic growth and real estate demand. Rising urbanization and consumer market bodes well for the property market especially in emerging ASEAN. The recent growth in office rents and capital values especially in Bangkok, Hanoi and Manila of between 5 and 9% year-on-year are just some examples.
Could you share with us the role ARA Asset management plays within the real estate sector in the Asia Pacific and how you create value for your investors interested in the region?
ARA’s multi-platform, multi-product global fund management strategy, combined with its dedicated teams with in-depth local knowledge enables the Group to offer enduring value to its investors. Our investor-operator philosophy creates value for investors – instead of relying on just market timing or leverage to generate higher investment returns, we generate enduring returns for our investors by improving the quality of the assets that we manage. We have our boots on the ground through our own property management teams in each country walk the ground, looking after our properties on a day-to-day basis and working hard to enhance their value over time.
Could you share more detail the strategy behind ARA’s privatization and more specifically what it means for your global expansion as you recently increased your presence in East Asia, Australia, and Europe?
Our vision is to build ARA into a global real assets fund manager that embraces Europe, Asia, and even America. In the fund management industry, size and track record are very important. To be a true global player, we need to have an AUM of over $100 billion. The biggest opportunity for ARA is that this is a very scalable business – you build a team of investment experts, asset managers, supported by legal, finance and research resources – and you can “bulk up”, or “scale up” the business quickly to raise funds and increase the suite of products and services being offered. For every country, we can grow a local team, staffed by local real estate professionals who can work the ground.
This vision has led me to privatise ARA with two new partners, world-renowned private equity firm Warburg Pincus and China’s AVIC Trust. These are both very powerful shareholders who can connect us to a global network of investor relationships, important access to global capital and new distribution capabilities in countries like China.