South, SE Asia set to shine for family office investors
Countries in South and Southeast Asia are going to experience a 20-year “up-cycle” from here, according to Timothy Tsui, managing partner of a Hong Kong-based multi-family office.
Tsui told AsianInvestor that he feels the demographic situation of India, as the most populous country on the planet and with a young median age as well as increasing manufacturing strength, will inspire growth across the region.
Tsui’s family business benefits from suppliers and factories in India, and he observes more manufacturing and high-value-add industries moving into countries like India, Vietnam, and Malaysia.
“In Penang, they make semiconductors now, which surprised me,” he told AsianInvestor.
“Indonesia is definitely going to grow. They have substantial natural resources and I hope they are able to use them smartly. Manufacturing is also shifting to Indonesia, with such a large population.
“We are seeing more sustainable energy going into places like Bangladesh and Thailand, where growth is fast and large-scale, as these countries look to address the problems of generating high carbon emissions.”
CAPITAL DIRECTION
A perennial problem in the emerging markets of Asia is directing capital evenly and at sufficient scale. “Money and resources and manpower, engineering talent, has to be diverted,” Tsui said. “The renewable energy opportunity, for example, is huge, and if we are able to harness and develop the technology at scale and with lower costs, that will radically change geopolitics in the region.”
This issue of a mismatch between fund management and the direction of investors’ capital towards sustainability and infrastructure projects was addressed at the recent Climate Investment Summit in London.
Jenn-Hui Tan, global head of stewardship and sustainable investing at Fidelity International, said, “[Mainstream investment funds], however they are badged as ‘green’, don’t address the core of the problem, which is how do you get that money to the emerging markets.”
According to Pavina Adunratanasee, smart solutions manager for decarbonisation at renewable energy producer Iberdrola in Australia, $23 trillion is required between now and 2030 to help emerging markets ex-China to meet their emissions mitigation targets.
A MOBILE GENERATION
Despite these challenges, Tsui and other family investors are quite bullish about Southeast Asia’s role as a global workplace for an increasingly large community of digital nomads. The concept of non-city living is appealing as an investment opportunity to these individuals, said Tsui.
He himself has recently been involved in buying land in Bali’s neighbouring island, Lombok, and hopes to develop a hotel there.
“Bali is already a haven for digital nomads and the cost of living is low – although not so much in Bali now. For those professionals who don’t have to actually sit in an office, as long as they have an internet connection, electricity, water, and some devices, they can make a living. With that, we are seeing a more mobile worker generation — in fact, several generations: it doesn’t matter if you’re 25 or 65.”
Another Hong Kong-based entrepreneur and family office head, Fusang’s Henry Chong, agrees that non-city living is a major trend in Asia. “It's not out of the question that a place like Bali could become a mini business hub too,” he told AsianInvestor.
“In the next couple of years there are going to be a lot of long-term structural shifts in society, in things like how we work and where we work.
“Covid hastened that change, but I think a lot of companies have realised that if you do it right, it’s certainly more efficient than having to fly people around in business class."
Chong predicts that as the trend for remote working takes hold, there’s going to be a divergence of cities.
“You’ll have places like Hong Kong that will continue to do well in many ways, because in a world where we do everything online, big cities will still act as hubs for people to come together. And there will always be a place for low-cost centres. But there will be a hollowing out of cities that are neither super hub connectors, nor cheap or convenient enough.”
Real estate fund managers are taking note of the impact on traditional office space. David Asplin, deputy managing director and head of real estate funds management at QIC in Brisbane, told AsianInvestor, “We are monitoring market conditions closely, as the full impact of Covid and changing occupier preferences for increased amenity, wellness, flexibility, and environmental factors play out in the near term. Upcoming transactions will be fascinating to analyse.”