In 2017, Asian investment in global real estate will pick up steam.
In London, New York, and Hong Kong, Asian investors prefer big ticket deals. propertyfinder qatar
According to CBRE’s latest report, global real estate remains an appealing asset class for investors, with Asian outbound investment in the sector increasing significantly year over year in the first half of 2017.
In the first half of 2017, approximately $45.2 billion of Asian outbound capital was directly invested in global land, reflecting a 98.4 percent increase over the $22.8 billion allocated in the first half of 2016.
The preference of investors for big ticket deals in the global real estate sector drove Asian outbound investment growth. About 74 percent of dedicated investments were invested in transformations worth $250 million or more in the first half of 2017, compared to 56 percent in the same timeframe in 2016.
Asian investors are also optimistic on Europe, the Middle East, and Africa (EMEA) and the Americas, which attracted $21.9 billion and $11.3 billion in cash, respectively, mainly due to a single $13.2 billion from the logistics portfolio acquisition. London (10%), New York (8%), Hong Kong (5%), Shanghai (4%), and Singapore (4%) were the top five global destinations for Asian investment in H1 2017. (4 percent ).
Intra-Asian investments continued to expand in the first half, reaching $10.4 billion, a 23 percent increase in total money. Asian investors were less interested in Pacific markets, with investment down 25% year on year to $1.6 billion.
“For the near future, Asian investors’ demand for high-quality cross-border real estate assets remains strong and sustainable.” The most notable shift in 2017 is the form of transactions, as well as the geographic and sectoral diversity, according to Tom Moffat, Executive Director, Capital Markets, CBRE Asia.
Institutional investors from Asia became more prominent players in the international real estate sector in the first half of 2017, aided by many high-profile transactions in EMEA and the Americas. Institutional investors contributed roughly 64 percent of all EMEA capital deployments and 35 percent of all capital deployments in the Americas, according to CBRE.
Asset strategies continue to emphasize sectoral diversity, with Asian outbound buyers rebalancing foreign real estate portfolios. The most appealing commercial real estate sectors for Asian investors are office and logistics, which accounted for 44 percent and 34 percent of all invested capital in H1 2017. Residential (7%), hotel (7%), retail (6%), and alternative industries such as aged-care housing (2%) remained niche investments worldwide.
Despite increased regulation, China’s outbound investment remains the region’s biggest, with a new community of investors becoming more involved in the first half. In the first half of 2017, Chinese sovereign wealth funds (SWFs) became the largest single outbound investor class, with total capital deployment reaching $25.6 billion, up from $10.1 billion the previous year. In the first half of 2017, Chinese property companies and conglomerates were also significant buyers of offshore real estate properties.
On August 18, the State Council and the National Development and Reform Commission (NDRC) released a new set of capital controls, focusing on offshore real estate investments. According to CBRE, this regulatory change is unlikely to impact outbound investment appetite in the medium to long term, but it will reshape investment strategies in the future.
“Our data shows that in H1 2017, China remained Asia’s largest source of cross-border commercial real estate investment capital (both new and existing capital circulating offshore).” New regulations should help to ensure that potential outbound investment is more financially sound and strategically based, but the effect of Chinese capital on key global real estate markets will likely continue for some time,” said Robert Fong, CBRE Asia Pacific’s Director of Research.
The following are some other main findings:
Non-Chinese investors are becoming more active: Outbound investors from Singapore ($6.8 billion), Hong Kong ($6.6 billion), and South Korea ($2.9 billion) are continuing to allocate capital as Chinese investors rebalance their portfolios.
The number of portfolio transactions is increasing: Asian outbound investors are increasingly using portfolio transactions to allocate funds. There were 26 portfolio transactions committed in the first half of 2017, compared to 13 in the first half of 2016.
When it comes to investing in real estate, Asian outbound investors are expanding their horizons beyond gateway cities. The top five urban destinations accounted for 31% of total Asian outbound capital in the first half of 2017, compared to 54% in the first half of 2016.
China’s outbound diversity: Chinese capital is still being deployed in a variety of ways around the country. Office (Americas), logistics (EMEA), residential (Japan), and hotels (Australia) were the top outbound investment destinations in the first half of 2017, demonstrating the global appeal of diverse and high-quality real estate properties.
