CBRE data release on Asian outbound investment in real estate in H1 2015.
Key Highlights:
• Overall Asian outbound investment in global real estate in H1 2015 reached US$19 billion. China maintained its leading status as the largest source of Asian capital, investing US$6.6 billion in global real estate in H1 2015, followed by Singapore with US$4.4 billion and Hong Kong with US$2.2 billion.
• The United States replaced the United Kingdom as the top destination country for Asian investors with US$6.1 billion of investments in H1 2015, while the U.K. received US$4.4 billion.
• London continues to be the top city for Asian investors with an inflow of US$3.8 billion, followed by New York (US$3.7 billion) and Sydney (US$2.2 billion).
• International flows outside Asia rose 13% y-o-y in H1 2015 while intra-regional flows within Asia fell 40%, a reflection of the challenges posed by a decrease in the number of investment opportunities in the region, a reduction in liquidity and the lowering of market interest rates.
• Outbound investment in standing assets by Asian investors maintained its momentum, with q-o-q growth in Q2 2015 of 8.9%, amounting to US$10 billion in capital flows.
• There was a notable increase in hotel investments, which accounted for US$5.8 billion or 30% of total Asian investment globally in H1 2015. This was largely supported by a number of major acquisitions by Chinese insurance firms, including the US$1.95 billion purchase of the Waldorf Hotel in New York by Anbang Insurance Group.
Frank Chen, Executive Director, Head of CBRE
Research, China, commented:
While cross-border investments within Asia came down 40% during
this period, we are seeing continued and robust outbound growth, with
international capital allocation increasing by 30%. Chinese investors remain
active in overseas property investment, with capital outflows in H1 2015
accounting for more than 1/3 of total investment from Asia. There has been
notable strengthening of investment sentiment among groups that continue to see
the benefits of overseas diversification, particularly in the case of Taiwanese
capital. Among Taiwanese investors, total volume invested in H1 2015 amounted
to US$1.8 billion, already surpassing the year-end total of US$1.3 billion for
2014. As Taiwanese insurers are unable to meet required investment returns due
to low yields in the domestic market, we expect them to continue to seek offshore
opportunities over the coming few years’ time.
There has likewise been a surge of Asian capital inflows into the
Pacific, with growth of 63% compared to the same period last year. Sydney and
Melbourne ranked third and sixth, respectively, in terms of most preferred
destinations globally among Asian investors. Many overseas investors consider
commercial real estate in these and similar global hotspots as attractive
investments with limited downside risk, due in part to the relative
affordability of stable income assets compared to available domestic stock. As
more Asian investors look abroad to diversify a growing pool of domestic
wealth, overseas market dynamics such as stable fundamentals, regulatory
support and market transparency will continue to drive them to pursue offshore
opportunities.”
Johnny Shao, Executive Director, Head of
Investment Properties, CBRE China, commented:
More than 1/5 of the total Chinese overseas investments in 2013
and 2014 went towards the U.S. market, with the majority being funneled into
hotel and office assets in major gateway cities. We have begun to observe Asian
outbound investment make significant steps towards broadening its scope in
2015, with the U.S. overtaking the U.K. as the most preferred destination country–U.S.
inflows this year are already at 90% of last year’s total. While media
headlines readily report on the sales of trophy assets in New York, about 40%
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.
London has maintained its position as the world’s leading city for
outbound Asian real estate investment. It received around 85% of U.K. inflows
so far this year. As property returns in other international gateway cities
continue to drop, London’s high-yield real estate market will still prove to be
an attractive option. Moreover, the U.K. property market is expected to be
propped up by the country’s anticipated steady economic growth over the coming
years’ time.
Note: Figures refer only to direct purchases of commercial real estate that exceed US$ 10 million, and exclude investment flows to development sites, entity-level acquisitions and purchases of residential properties intended for self-use.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
