According to CBRE, Asian investors accounted for nearly 20% of global cross-border investment, or $19 billion, in the first half of 2015. China ($6.6 billion), Singapore ($4.4 billion), and Hong Kong ($2.2 billion) were the top three sources of Asian outbound capital in terms of dollar value. qatar real estate
Asia has been especially important among the various new sources of foreign capital, which include Canada and non-institutional investors from the Middle East, due to the scale, tempo, and potential long-term effect of recent regulatory changes in domestic markets. For the first time, many local pension funds and insurance firms have been able to invest internationally.
"An enormous amount of dry powder is poised to be deployed in global property markets, fuelled primarily by multiple Asian institutional investors who remain under-allocated in real estate and aided by ongoing deregulation in many domestic markets. The Japanese pension funds, which currently have a $1.8 billion war chest and are expected to raise their global real estate portfolios in line with international trends, are particularly noteworthy "CBRE Capital Markets Asia Pacific Managing Director Richard Kirke said.
"Another intriguing development is the rapid increase in wealth among Asian HNWIs. In comparison to their global peers, they have a higher allocation of overseas real estate properties, which is an undeniable driving force behind the expansion of overseas development projects "Mr. Kirke added.
Although investment growth in the United States and Europe increased in the first half of 2015, it fell in Asia Pacific. The current downturn in market activity can be partly due to broader financial market uncertainty and volatile investor sentiment in China, following a quick recovery following the global financial crisis (GFC).
Currency factors such as weaker domestic exchange rates and a stronger US dollar have exacerbated the drop in activity in Asia Pacific, especially as the greenback strengthened against a number of local currencies, including Australia, Japan, and South Korea. When assessed in local currency terms, the area experiences a more moderate decline.
CBRE Asia Pacific's Head of Research, Dr. Henry Chin, said, "As a result of Asia's recent economic slowdown, China, Singapore, and South Korea dropped out of the top 20 market rankings in H1 2015. Despite recent uncertainty, China remained one of the world's largest outbound capital sources in H1 2015, with $6.6 billion in investments, behind only the United States, Canada, and Germany.
We believe that the recent market downturn and Yuan depreciation will be minor stumbling blocks on China's long-term path to global expansion, and that the area will benefit from increased long-term asset holdings and the growth of a more balanced sector mix "Dr. Chin continued.
CBRE predicts a rise in strategic acquisitions by foreign investors with a long-term investment horizon, or "permanent capital," in the coming years. These players' strong interest in increasing their exposure in the Asia Pacific region has been reinforced by a number of transactions in H1 2015, primarily by REITS and prominent sovereign wealth funds (SWFs), in line with their long-term liability-matching allocation strategies.
A more balanced perception of investors' overall portfolio allocation and management is also being driven by a change in investor priorities, or sector rebalancing. Concerns about declining yields and restricted asset supply are fueling a flight to alternative investments in Asia Pacific. As many Asian markets continue to grow, more sector rebalancing is expected in the medium term, with the manufacturing and hospitality sectors, as well as alternative sectors like senior housing and healthcare, poised to benefit.