Asian Investors Continue To Target London, New York and Hong Kong

Global real estate continues to serve as an attractive asset class for investors, with Asian outbound investment into the sector posting significant year-on-year gains in the first half of 2017.

Approximately $45.2 billion of Asian outbound capital was directly invested into global property in the first half of 2017, representing a 98.4% rise year-on-year against $22.8 billion allocated in the first half of 2016.

Strength in Asian outbound investment is led largely by the preference of investors for so called ‘big ticket deals’ in the global real estate sector. In the first half of 2017, over 74% of committed investments were deployed into transitions valued at $250 million and over, versus 56% in the corresponding period in 2016.

Geography-wise, Asian investors remain bullish on Europe, Middle East and Africa (EMEA) and the Americas, drawing $21.9 billion--driven largely by a single $13.2 billion from the logistics portfolio purchase--and $11.3 billion in capital, respectively. The top five global destinations for Asian investment in H1 2017 were London (10%), New York (8%), Hong Kong (5%), Shanghai (4%) and Singapore (4%).

Intra-Asia investments continue to grow, finishing the first half at $10.4 billion and representing a 23% growth in total capital. Pacific markets were less attractive to Asian Investors, dropping 25% year-on-year to $1.6 billion.

Sectoral diversity also continues to be a major theme within asset strategies, with Asian outbound investors rebalancing real estate portfolios internationally. Outbound investment from China remains the region's largest despite heightened regulation, with a new group of investors more active over the first half. Industry research reveals that Chinese sovereign wealth funds (SWFs) are the largest single outbound investor class in the first half of 2017, driving total capital deployment to $25.6 billion versus $10.1 billion year-on-year. China-based property companies and conglomerates have also been considerable buyers of offshore real estate assets in the first six months of 2017.

It’s perhaps of little surprise that China remains the largest source of cross-border commercial real estate investment capital (both new and capital already circulating offshore) from Asia in H1 2017. New regulations should help to ensure that future outbound investment is more financially sound and strategically focused, but it’s clear to see that the impact of Chinese capital on key global real estate markets is set to continue for the foreseeable future. Exciting times ahead it seems.