Steady recovery for inbound Asian investment, says CBRE
Steady recovery for inbound Asian investment, says CBRE
Real estate funds remain key ways of exposure to region’s markets
The gap between direct real estate investments flowing into Asian markets and those spilling outside continues to widen, according to new research from CBRE.
Inbound investment in Asian property markets amounted to USD4.7 billion in the first half of 2016, buoyed by a strong inflow of capital from international institutions over the past 18 months. A strong appetite for overseas investments slung outbound investments from Asia to USD27 billion at the same time.
Asia will remain an important region for international investors though, said Ada Choi, senior director of research at CBRE Asia Pacific. “Most institutional investors outside the region are under-weight with regards to the Asian market and over the long-term this will act as an incentive to continue investing in the Asian markets for greater geographic diversification.”
Capital flows are gushing forth outside Asia more than they do inside the region over the last nine years. Investments in the region totalled USD9.6 billion last year, compared with USD21 billion in 2007.
More: Another year, another record for Asian outbound investment
“Investing globally has enabled many Asian-based investors to gain relatively better returns underpinned by stable, well-located assets and to geographically diversify their investment portfolios,” said Marc Giuffrida, executive director for capital markets at CBRE. “While we have seen Chinese, Korean and Taiwanese institutional investors active in recent years, we are seeing Japanese investors beginning to explore the sector as many have little, or in some cases, no global real estate exposure.”
Inbound investments collapsed to USD1.3 billion in 2009 at the height of the global financial crisis, while outbound investments grew from USD4.3 billion in 2009 to USD47 billion in 2015.
Although inbound investment has yet to return to pre-crisis levels, Choi noted that international fund managers have raised USD22 billion in capital for Asia-focused real estate funds in the last two years. “Real estate funds remain a key route for international investors looking to enter Asian markets,” she said.
Read next: CBRE ranks Asia third in global sustainability survey
Source: Property Report