Asian Outbound Investment - Hong Kong Outpaces Regional Markets Registering Y-O-Y Growth of 31%
CBRE today releases data on Asian outbound investment in real estate in 2014.
Hong Kong led the region in outbound capital growth with 31% increase year-on-year, amounting to US$6.3 billion
Asian outbound real estate investment had a record year, reaching US$40 billion—reflecting an increase of 23% year-on-year
Deployment of capital into real estate accelerated as new investor types emerged over the year, in particular: insurance groups from China and Taiwan and Chinese property companies
Investment strategies have begun to evolve as investors look beyond traditional gateway markets. In 2013, 60% of outbound investment focused on five global investment destinations, but in 2014 this reduced to 39%. Notable beneficiaries of this trend in 2014 included Paris in Continental Europe and Los Angeles, San Francisco and Washington in the US
Asian cross-border real estate investors also began to diversify in terms of asset classes; investing more in hotels and industrial—though office continued to dominate
EMEA continued to receive the largest share of Asian investment, receiving US$13.7 billion of the total, but remained flat on 2013. Other regions saw substantial increases in Asian investments: Americas (up 20% year-on-year), Pacific (33% year-on-year) and Asia intra-regionally (58% year-on-year). In Asia, Japan was the leading target destination, followed by China
Ada Choi, Senior Director, CBRE Research Asia, commented:
“Outbound investment for whole year 2014 surpassed 2013, the second year in a row the region has reached a record high. Singapore maintained its position as the number one source of outbound capital, closely followed by China and Hong Kong—with all three markets showing an increase in cross border investment. Hong Kong registered the greatest percentage increase among the three leading countries. The strong growth in investment demand outside the city is an outcome of the local tightening property measures imposed in the past few years. Together with the latest round of cooling measures imposed by the Hong Kong Government last Friday on restricting the mortgage lending of properties under HK$700m, property companies are more active in searching for investment projects outside Hong Kong. Also It is rational for large-sized property companies and institutional investors to seek global expansions and diversify their investments and businesses as they continue to look for growth.
Singaporean investors looked offshore as a result of compressed yields in their home market and a shortage of investible assets, while Chinese outbound growth was in particular driven by the emergence of new sources of real estate capital, particularly insurers as they sought to increase their allocation to real estate under more relaxed rules.
We also saw Chinese property developers increasingly active in international markets. Alongside more direct investment, more experienced Asian institutional investors from places such as Korea and Japan are increasingly gaining exposure via indirect funds and club deals. Established sources of capital such as these will continue to grow, but the emergence of sources of new capital such as the Chinese and Taiwanese insurance companies will make a significant mark on global real estate markets in the coming years.”