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Asia Pacific investments into global commercial real estate dropped by 12.7 percent to around US$21.1 billion (S$28.6 billion) in the first five months of 2016 over the same period last year, revealed a Cushman & Wakefield report.
However, according to Cushman & Wakefield said the softer transaction volumes is not an indication of a long-term trend of slowing appetite.
“In the short term, deal flows are susceptible to some frictional elements. With deal sizes increasing and cap rates continually to compress, investment volumes will generally be lumpy as investors lengthen the due diligence process,” it said.
It noted that while volumes could be higher if not for the impending ‘Brexit referendum’ by end-June, investments into the UK remained sustained. In fact, Asia Pacific investors injected US$2.7 billion (S$3.7 billion) into London’s commercial real estate – the highest following New York.
“With UK’s EU referendum looming at the end of June, it is an opportune time to see how investors from the region are reacting to the situation. While there is an air of caution, investment volumes into the UK from the region have held up better-than-expected,” said Sigrid Zialcita, Managing Director, Head of Research, Asia Pacific.
Some investors have even moved aggressively into the core-plus investment space outside London.
Singapore-based Mapletree, for instance, spent US$1.5 billion (S$2 billion) in real estate investment outside the capital since 2015. This includes the acquisition of a student accommodation portfolio from Mansion Student Accommodation Fund and the US$719.8 million (S$976.5) purchase of office park, Green Park, in Reading.
“Investments into the UK have remained apace, as investors detect a buying opportunity amid the short-term volatility. Moreover, the pound is five to six percent weaker now to the greenback as compared to last year,” said Gary Hollis, Managing Director, Head of Capital Markets, Asia Pacific.
“Despite the risk of an exit, the country and its capital are vibrant, global business and financial hubs and the longer WALEs and strong tenant base remain compelling; investors from the region are cognizant of these qualities and are opting to take a long-term view.”
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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