CBRE: Asian CRE Investment Gains Momentum

Asian outbound commercial real estate investment posted significant year-on-year gains in first-half 2017, reported CBRE, Los Angeles.

Asian investors purchased more than $45 billion of global property in first-half 2017, nearly double their allocation in first-half 2016.

“The appetite of Asian investors for high-quality cross-border real estate assets remains solid and sustainable for the foreseeable future,” said CBRE Asia Executive Director Tom Moffat.

Moffat noted Asian outbound investment tended toward “big ticket” deals. In first-half 2017, nearly three-quarters of committed investments went to transitions valued at $250 million and up, compared to 56 percent in the corresponding period in 2016.

Geography-wise, Asian investors remain bullish on the Europe-Middle East-Africa region and the Americas, which drew $11.3 billion in capital. London and New York drew the most Asian investment by a significant margin.

In first-half 2017, institutional investors from Asia continued to act as more influential players in the international real estate sector, supported by several marquee transactions in EMEA and the Americas. CBRE estimates that approximately 64 percent of all EMEA capital deployments and 35 percent of Americas capital deployments originating from Asia were committed by institutional investors.

The office and logistics sectors drew the most attention from Asian investors, accounting for 44 percent and 34 percent of all committed capital throughout first-half 2017, respectively. CBRE said residential (7 percent), hotels (7 percent), retail (6 percent) and alternative sectors such as aged-care housing (2 percent) remained niche investments globally.

Chinese sovereign wealth funds emerged as the largest single outbound investor class in 2017, driving total capital deployment to $25.6 billion versus $10.1 billion year-over-year, CBRE said. “China-based property companies and conglomerates have also been considerable buyers of offshore real estate assets in the first six months of 2017,” the report said.

China instituted a new round of capital controls regarding offshore real estate investments on August 18. CBRE said this regulatory move may not affect the medium- to longer-term appetite for outbound investment, but could re-shape investment strategies going forward.

“New regulations should help to ensure that future outbound investment is more financially sound and strategically focused, but the impact of Chinese capital on key global real estate markets should continue for some time,” said CBRE Asia-Pacific Research Director Robert Fong.