For my first blog I thought I would share some of my observations about the similarities/differences between Asia Pacific and Canada, where I am from. As I am sure many of you know Canada is a very large country in terms of area, slightly bigger than China, but with relatively few people compared to many countries in Asia, Canada 35 million vs. China 1.35 billion. Despite being separated by the Pacific Ocean there are many cultural and economic ties between the two regions. The economic linkage has strengthened significantly in recent years with large investments by Asian companies into Canada’s resource sector – e.g. CNOOC buying Nexen and Petronas buying Progressive Energy.
The flow of investment has not been a one-way street, Canadian pension funds have been amongst the most active inter-regional real estate investors in AP. Based on our research data, Canada was one of the top sources for cross border real estate investment (USD 1.9 billion) in AP during 2012. Canada’s largest pension fund, CPPIB, has been involved in several large transactions/investments in AP including the Barangaroo office/retail development in Australia & a JV with GLP in Japan. Also it was recently reported that Caisse de depot du Quebec, a CAD 160 billion pension fund, is going to increase its real estate allocation by CAD 10 billion in the next 18 months. Some of these funds are likely to flow into this region, in particular China.
On a country level view, there are many similarities between Australia & Canada: both large countries with few people, an abundance of natural resources, and large exporting nations. From a real estate perspective there are also many commonalities: investment-grade ownership dominated by large pension funds & public companies (e.g. REITs), housing markets that were relatively unscathed by the global financial crisis, and a high level of property market transparency. In the Jones Lang LaSalle 2012 Global Transparency Index, Australia & Canada ranked 3rd & 6th respectively.
In spite of some common connections, there are many differences between the two regions from a real estate perspective. A couple of simple differences are evident from our Asia Pacific Property Digest. In Canada, the standard area measurement is sq ft whereas in AP it varies: sqm, sq ft, ping, pyong, and tsubo. The time period for rental quotes can also be another source of difference with annual being the standard in Canada while in AP annual, monthly, and even daily are used. Yes, daily! This one caught me by surprise the first time I saw it used in a Shanghai report. For those curious, the “per day” quotation traces back to the early 1990s when foreign companies operating in Shanghai had to use hotel rooms as offices because of a lack of dedicated office space.
I have only touched on a small subset of similarities & differences between the two regions but I will be sure to share other interesting observations discovered in the year ahead..
