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Chinese investors accounted for 60 percent of Asian outbound investment in the first half of 2016 at US$16.1 billion (S$21.6 billion) or more than double the amount over the same period last year, revealed a CBRE report.
Insurance firms emerged as the most active source of Chinese outbound capital, accounting for 50 percent, followed by conglomerates (23 percent), developers (10 percent) and sovereign wealth funds (nine percent).
Notably, US remained the favoured destination of Asian outbound investment, with office and hotel as the most-preferred asset class.
The office sector accounted for nearly half of overall investment at 47 percent, while hotel properties made up 33 percent of total investment.
According to CBRE, experienced Asian capital also invested in alternative sectors such as student housing with two major deals completed in 1H 2016 by Singaporean investors.
“Early adopters who have existing experience in outbound investment are now looking at these sectors to diversify their portfolio. It’s interesting to see the year’s top outbound deals so far have included student housing acquisitions in the UK and US,” said CBRE Global Capital Markets executive director Marc Giuffrida.
The report also noted a strong intra-regional activity within Asia by Asian capital as investors sought to diversify domestic market risks and achieve higher returns.
During the first half of 2016, Chinese conglomerates were active in completing signature deals in Japan and Hong Kong while Singaporean investors continued to be active in Southeast Asian markets.
“Concerns over the market slowdown in their home market have led Chinese investors to seek safer investment environments which offer higher potential returns,” said Ada Choi, senior director of research at CBRE Asia Pacific.
Looking ahead, Choi expects Asian outbound investment momentum to continue to be strong in the latter half of 2016 as there are still some pipeline deals expected to be completed by Asian investors.
“Chinese capital, in particular, will remain active; however, the growth will be at a more sustainable rate rather than a quick acceleration,” she said.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg