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Asia saw direct real estate investment by international investors increase to US$9.6 billion (S$13.3 billion) in 2015 from US$1.4 billion (S$1.9 billion) in 2009, with 1H 2016 registering almost US$4.7 billion (S$6.5 billion) of inbound investment, revealed a CBRE report.
Asia posted a strong inflow of institutional capital during the last 18 months, particularly from North America and the Middle East. During the first half of 2016, international institutions accounted for 57 percent of overall cross-border investment in direct commercial real estate, a significant increase from 2012’s nine percent.
“Its strong long-term growth prospects mean that Asia will remain an important region for international investors. Most institutional investors outside the region are under-weight with regards to the Asian market and over the long-term this will act as an incentive to continue investing in the Asian markets for greater geographic diversification,” said Ada Choi, senior director of research, CBRE Asia Pacific.
Choi noted that real estate funds remain a key route for international investors looking to enter Asian markets.
In fact, several international fund managers had successfully raised capital for Asia-focused real estate funds over the last two and a half years. Totalling US$22 billion (S$30.55 billion), such high volume of capital raised is expected to translate to solid investment demand within the region, said Choi.
Meanwhile, Asian capital investment appetite outside of domestic markets had been on the uptrend since the Global Financial Crisis. As such, capital expenditure by Asian investor in domestic markets fell from 80 percent in 2009 to 47 percent in 1H 2016.
China led the Asian investor pack, injecting close to US$40 billion (S$55.5 billion) into international real estate markets from 2013 to 1H 2016. It is followed by Singapore, with US$34 billion (S$47 billion) during the same period.
“Investing globally has enabled many Asian-based investors to gain relatively better returns underpinned by stable, well-located assets and to diversify their investment portfolios geographically,” said Marc Giuffrida, Executive Director, Capital Markets, CBRE.
The report noted that core commercial assets like prime office buildings remain the key focus for both Asian and international institutional investors.
“Build-to-core continues to be a viable strategy for opportunistic and long-term inbound investors in Asia.”
And with the logistics sector set to benefit from the long-term growth of e-commerce, several institutional investors have already acquired logistics assets by partnering logistics developers and investing in logistics funds, added CBRE.
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