Shanghai, February 28, 2017
– Asian outbound capital flows into global real estate markets totaled US$60 billion in 2016. China has overtaken Singapore as the largest source of capital, accounting for nearly half of total investment—with 47% or US$28.2 billion—according to latest data compiled by CBRE. China’s institutional investors continued to lead investment activity, contributing to four of the top ten biggest outbound deals in 2016.
U.S. regarded as the most attractive market for second consecutive year
For the second consecutive year, CBRE figures reveal that the U.S. remained the most favored destination for Asian capital, drawing 43% of the overall total, followed by EMEA as the second-favored at 27%. Asia comprised 23% of overall investment turnover, up from 21% in 2015, which shows that Asian investors preferred to keep more capital within their own region.
New York surpassed London as the top metropolitan destination for outbound investment in 2016. Although affected by Brexit, London still ranks as the second most popular city. The top five destinations—New York, London, Hong Kong, Seoul and Sydney—contributed to 37% of the overall total, a decrease from 42% y-o-y, revealing that investment was spread across increasingly diverse destinations. Compared to 2015, more Asian capital was deployed to alternative gateway cities in search of attractively priced opportunities. Places in Continental Europe such as France and the Netherlands; Chicago, San Francisco and Washington in the U.S.; and Vancouver in Canada, are now on more investor’s radar screens.
Office and hotel remain focus but student housing and healthcare sector gain interest
The office sector remained the most-preferred asset class for Asian investors, accounting for 50% of overall investment. Gateway cities of London, New York and Hong Kong were the top three destinations for office investment in 2016. Meanwhile, the hotel sector garnered more interest with US hotel assets attracting significant international investment.
The past year saw more interest in niche sectors—student housing and healthcare in particular—by experienced Asian investors. It was the first time that transactions were recorded in the student housing sector; three major deals were completed by Singaporean investors in 2016.
China becomes the largest source of Asian capital, experiencing 56% rise in outbound investment
2016 has seen a rapid growth in outbound capital flows into real estate from Chinese investors, who surpassed Singapore as the largest source of capital with overall investment surging more than 56% to US$28.2 billion from US$18.1 billion in 2015.
Office and hotel assets remained the major focus of Chinese investors, accounting for 85% of China’s capital outflows—the biggest transaction of the year was a hotel acquisition in the US by a Chinese investor. The U.S. retained its position as the most popular destination for Chinese overseas real estate investment, followed by Hong Kong and the UK. Insurance companies have been one of the major growth drivers of China’s outbound investment among institutional investors. Of the top ten Asia outbound deals of the year, six deals were closed by institutional investors and thereof 4 were concluded by Chinese institutional investors.
Alan Li, Managing Director of Capital Markets, CBRE Greater China, commented “Chinese investors remain active in deploying capital offshore into global real estate assets in 2016. Although office and hotel assets are still the main investment targets, more investors are exploring opportunities in alternative sectors, such as senior housing, to seek higher yields. Despite recent policies by the government restricting Chinese outbound investment, Chinese appetite for global real estate investment will remain solid but more cautious. Instead of larger transactions, Chinese investors may simply opt for a higher number of smaller deals. As outbound investment, along with the One Belt, One Road initiative and the internationalization of Chinese Yuan, remains a key component of China’s long-term economy policy, there continues to be a steady flow of Chinese capital overseas as investors seek to diversify their portfolios.”