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Mainland leads region in property investment
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ASIAN outbound investment into global real estate reached US$19 billion in the first half, with China’s mainland maintaining its position as the largest source of Asian capital, world-leading commercial real estate services provider CBRE said in a recent report.
Between January and June, investments by Chinese mainland buyers into global real estate totaled US$6.6 billion, followed by Singapore’s US$4.4 billion and Hong Kong’s US$2.2 billion, according to data from CBRE, which tracks direct purchases of commercial real estate that exceed US$10 million. Investment flows to development sites, entity-level acquisitions and purchases of residential properties intended for personal-use were excluded from these results.
London remained the biggest global target for Asian investors, who channeled some US$3.8 billion into the UK capital during the first six months. It was followed by New York and Sydney, which attracted US$3.7 billion and US$2.2 billion, respectively, during the same period.
“While cross-border investments within Asia fell 40 percent during this period, we are seeing continued and robust outbound growth, with international capital allocation rising 30 percent,” said Frank Chen, executive director, head of CBRE Research, China. “Chinese investors remain active in overseas property investment, with (their) capital outflows in the first half of 2015 accounting for more than one third of total investment from Asia.”
Capital flows outside Asia rose 13 percent from a year earlier in the first half, while intra-regional flows within Asia dropped 40 percent, reflecting the challenges posed by a declining number of investment opportunities in the region, a reduction in liquidity and the lowering of market interest rates, according to CBRE.
By property type, there was a notable increase in hotel investments, which accounted for US$5.8 billion or 30 percent of total Asian investment globally in the first half. This was largely a result of major acquisitions by Chinese insurance firms, including the US$1.95 billion purchase of the Waldorf Astoria Hotel in New York by Anbang Insurance Group.
There has likewise been a surge of Asian capital into the Pacific, which rose 63 percent from a year earlier. Sydney and Melbourne ranked third and sixth, respectively, as preferred global destinations for Asian investors. Many overseas investors see commercial real estate in these and similar global hotspots as attractive investments with limited downside risk.
“We have begun to observe Asian outbound investment make significant steps towards broadening its scope in 2015, with the US overtaking the UK as the most preferred destination country — US inflows this year are already at 90 percent of last year’s total,” said Johnny Shao, executive director, head of investment properties, CBRE China.
“While media headlines readily report on the sales of trophy assets in New York, about 40 percent of the capital has flowed into Boston, Washington, Seattle and Los Angeles — all markets with very positive fundamentals and a high availability of attractive investment opportunities.”
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