Third Mapletree Annual Lecture Explores a New Model of Commercial Real Estate Valuation

  • Apr 06, 2021
  • Mapletree Investments

SINGAPORE  – Held virtually for the first time, distinguished keynote speaker and real estate expert Professor Stijn Van Nieuwerburgh delivered the third Mapletree Annual Lecture on 31 March 2021. Organised by Singapore Management University (“SMU”) and supported by Mapletree Investments (“Mapletree” or “the Group”), the lecture was titled “The Commercial Real Estate Eco-System” and was attended by more than 230 SMU students, academics, industry professionals as well as members of the public.

The webinar was kicked-off by Ms Wendy Koh, Chairman of the SMU Advisory Board for Real Estate Programme and Group Chief Financial Officer of Mapletree Investments. Bringing his depth of knowledge, expertise and insights, Professor Stijn prefaced his lecture with observations on Commercial Real Estate (CRE) specifically in the United States (US) where even though transaction volumes were down sharply by 60% between February 2020 and February 2021, valuations experienced a 0.9% growth for the same period. Drawing evidence from demand-based analysis, he suggested that inelastic foreign demand, especially in gateway cities in the US, could be a supporter of price growth. 

In his 45-minute lecture, Professor Stijn also shared an improved model of CRE valuation that considers investor characteristics on top of property characteristics. Using the new model, he mapped the influence that foreign investors and large private equity funds have had on CRE prices in gateway markets. He also introduced tools that helped to estimate the most important asset characteristics for each investor type.

The lecture was followed by an insightful panel discussion moderated by Professor Melvyn Teo, Deputy Dean (Faculty and Research), SMU Lee Kong Chian School of Business. Besides Professor Stijn, the panel comprised:

• Mr Wong Mun Hoong, Regional Chief Executive Officer, Australia & North Asia, Mapletree Investments Pte Ltd;

• Ms Priya Kini, Managing Director and Head of Global Banking Singapore, The Hongkong and Shanghai Banking Corporation Limited.

The panel discussion touched on several timely topics which included how work-from-home trends will impact demand for office space, as well as how requirements of sustainability reporting will impact the demand and valuation of CRE.  Mr Wong shared his views that Covid-19 has accelerated the growth of the long term demand for logistics and data centres, whilst retail malls will have to continue to enhance its experiential aspects even when footfall returns post-Covid.  Although, the office sector is most impacted depending on the region and industry, he does not expect a significant reduction in office footprint in Asia. In terms of office space, Ms Kini shared that most offices will take on a hybrid model as employees with surveillance and compliance roles would still need to work from office. There will also be a balance of companies giving up office spaces and others taking up more to ensure the provision of a healthy infrastructure for their employees.

Keynote speaker and panellists at the Mapletree Annual Lecture (Webinar 2021):

Top left: Professor Melvyn Teo, Deputy Dean (Faculty and Research), SMU, Ms Wendy Koh, Chairman of the SMU Advisory Board for Real Estate Programme and Group Chief Financial Officer, Mapletree Investments, Professor Stijn Van Nieuwerburgh, Earle W. Kazis and Benjamin Schore Professor of Real Estate and Professor of Finance at Columbia University’s Graduate School of Business.

Bottom left: Mr Wong Mun Hoong, Regional Chief Executive Officer, Australia & North Asia, Mapletree Investments, Ms Priya Kini, Managing Director and Head of Global Banking Singapore, The Hongkong and Shanghai Banking Corporation Limited

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