A comment made by Mark Lindeis, managing director of Nordic investment bank ABG Sundal Collier, at AsianInvestor's annual investment summit in Hong Kong last week, raises some interesting discussion points.

“Prior to the crisis we invested in yield-oriented real estate and had started looking at the PRC and China,” said Lindeis during a panel on the outlook for real estate investments. “However, after the crisis we decided to refocus on Germany and Scandinavia and try to find opportunistic deals in the USA.”

He added that it would need an improvement to risk appetite before the bank started another appraisal of Asian deals.

His comments seem to dovetail with other market psychology revolving around financial instability, whether temporary or enduring. Whenever the outlook appears rocky, the US dollar does well that day and emerging markets get jittery.

If it's the case that western investors have been turning away from Asian property risk (and replacing it with US property – which doesn’t seem like a great swap), then who has been investing and propelling Asian property prices higher? Logically it must be locally based or regional investors.

Plus if western funds return when our interest rates are going up, and local investors are feeling less bullish about property as a result, that introduces yet a new factor. It’s a potential exit for the latter and an entry point for the former.

“People have gravitated back to core real estate [in the last few years],” says Mark Gabbay, CIO of Asia-Pacific for LaSalle Investment Management. “There’s a finite supply, hence a significant price appreciation. When you’re looking at new transactions today, you really have to make sure it is the right price when you go in, rather than trying to factor in future growth estimates."

So, Asian investors are investing in real estate. Win Phromphaet is head of global and real estate investments at the investment bureau of Thailand’s Social Security Office, which has a really niche real estate brief.

During the real estate panel, he said: “Our Thai property portfolio gives us a stable 8% yield in retail and industrial. We’d like to invest in more commercial offices, but it's very hard to find Grade-A space in Bangkok and landlords don’t want to sell.”

Markets such as Bangkok are too small for a large number of regional property funds. Even if you can find a building that is of sufficient scale to justify all the man-hours, who do you sell it to?

What this means is that for regional and global funds, the big cities in the bigger markets are capturing the lion’s share of investor attention.