States emerged the most-favored overseas market for Asian real estate investors
in 2016, for the second year in a row. US investments attracted more than $25
billion of the total $60 billion that Asian investors, led by institutional
investors, deployed in overseas real estate, according to CBRE. Chinese
investors were the most active, accounting for $28 billion, or 47%, of the
total overseas Asian real estate investment, the Los Angeles-based commercial
real estate services firm reports.
the Chinese government has put in policies clamping down on Chinese overseas
investments, it seems Chinese investors are interested in diversifying their
holdings. According to Yvonne Siew, executive director, CBRE Global Capital
Markets, “With more scrutiny on cross-border capital flows and rigorous checks
by the government which may lengthen the approval process, Chinese outbound
real estate investment may moderate, gathering at a more sustainable rate.
Instead of larger transactions, Chinese investors may simply opt for a higher
number of smaller deals. Regardless, Chinese appetite for global real estate
investment will remain solid but more cautious, with Chinese insurers and
qualified asset managers being the active institutional investor class.”
The China Business Review expects that there will be
short-term issues on the Chinese overseas commercial property investment front as
a result of China’s capital controls. However, in the longer term, Chinese
insurance companies and private equity funds have a supply of money that is
available to meet the US demand for commercial real estate investments.
reports that the EMEA region – comprising Europe, the Middle East and Africa –
was another favored investment destination, attracting 27% of the Asian
investment. Asian investors were also partial to their own region, putting in
23%of the investments there, up from 21% in 2015.
overtook London as the most favored metro area these investors favored in 2016,
although the city’s share of the investment declined from 2015. Other metro
areas the investors favored were Hong Kong, Seoul and Sydney. These top five
metros attracted 37% of the Asian investment, compared to 42% in 2015, as the
Asians diversified their investments more.
to 2015, more 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 US; and
Vancouver in Canada, are now on more investor radar screens,” noted Robert
Fong, Director of Research, CBRE Asia Pacific.
while Chinese, Hong Kong, Singapore and South Korean investors continue to head
up the list, India is also emerging as a capital source. Japanese capital also
stepped up, with the United States a major draw for the Japanese. The
commercial real estate services firm expects Japanese overseas real estate
investment in 2017 to increase, coming off a low level in 2016.
at preferred property types, the Asian investors favored office properties,
which made up half of their total investment, especially going for office
properties located in the “gateway” cities of New York, London and Hong Kong. Hotel
properties also attracted interest. In fact, a Chinese investor’s purchase of a
US hotel property was the biggest deal
of the year, CBRE reports.
investors also showed more interest in niche sectors such as student housing
and healthcare, looking beyond the major commercial property types. In a first
for the student-housing niche, Singapore investors got into three major deals
in that property type. CBRE sees this interest in niche property types as
resulting from a quest for higher yields and also “keeping in tune with