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Asian outbound real estate investment reached another record high year in 2015, standing at US$62.4 billion—a 37% year-on-year increase, a CBRE report revealed Monday (29 February).
“Perhaps the biggest highlight of the year is the huge increase in big ticket and portfolio transactions. Outbound volume with deal sizes of over US$500 million increased more than two-fold,” said Ada Choi, Senior Director at CBRE Research Asia. The year saw a significant increase in big ticket transactions—deals worth over US$500 million—and portfolio transactions which rose 167 percent and 16 percent, respectively.
According to CBRE, the office sector remained the most-preferred asset class, but hotel and industrial assets continued to receive strong appetite from Asian investors. “The industrial sector recorded significant uptick in activity mainly driven by two major industrial portfolio deals closed in the US, due to the strong US dollar driving an increase of consumer spending on imported goods and the solid growth in e-commerce, translating into demand for warehouse space,” it said.
Meanwhile, Singapore rose as the top Asian real estate investor last year with US$19.3 billion (S$27.16 billion), beating China at US$17.6 billion (S$24.77 billion).
Asian institutional investors continued to lead outbound investment among the different investor types. Chinese and Singaporean sovereign wealth funds completed a number of major portfolio deals outside Asia, while insurance companies from China and Taiwan are increasingly expanding their overseas portfolios, with more new insurance companies acquiring their first property outside their home country. Property companies also became more active in the international market, particularly Singaporean groups which were involved in two major portfolio deals last year.
CBRE also noted a more diversified outbound investment destinations for Asian investments. London remained the top investment destination for Asian investors in 2015 but has contributed to a lower portion of the outbound investments, decreasing from 17 percent in 2014 to just 13 percent in last year. On the contrary, other major gateway cities such as New York, Sydney, Shanghai and Hong Kong have all received a higher proportion of Asian investments in 2015.
“Geographical diversification has been one of the top reasons behind investing in overseas real estates,” said Marc Giuffrida, executive director at CBRE Global Capital Markets. “This year we saw investments amongst the top global gateway cities becoming more evenly distributed. London received a reduced share of Asian investment while New York is catching up fast as the second most popular city, thanks to the relatively strong economic growth in the US.”
Going forward, CBRE expects the Asian outbound investment momentum to continue this year as major players are still building up their global portfolios while other players are catching up. “Following the positive momentum of last year, Asian outbound investment has reached another record high year in 2015. The low yield environment in Asia continued to encourage investors to capitalize in markets offering higher potential returns,” it added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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