Global political and economic volatility prompted many Asia Pacific real estate investors to become more active in deploying capital in their home markets, a report by property consultancy JLL has revealed.
The growth in purchasing power of domestic investors was particularly evident in China and South Korea last year. According to JLL, Chinese investors deployed $29.1 billion into domestic real estate assets, a 50 percent increase year-on-year. In terms of percentage increase, South Korean investors’ purchasing power was even higher, with a 75 percent increase in investments in their home market, up to $12.4 billion in 2016.
“In China, Hong Kong, Korea and Japan, we saw an increase in the volume of domestic deals in 2016, spurred by strong in-country opportunities as well as many institutional investors allocating more money to the real estate asset class in general,” commented Myles Huang, research director for Asia Pacific capital markets at JLL.
Even though the Chinese remain active cross-border investors, Huang noted that the increased scrutiny on outbound capital by the Chinese regulators would lead to sustained domestic investment in China this year as well.
Singapore however was one outlier. JLL estimated a 16 percent fall in domestic investment in Singapore last year, even as the total inbound investment into the city-state increased by an overwhelming 441 percent on a year-on-year basis.
Explaining the reasons for the muted domestic investor appetite, Tay Huey Ying, head of research for Singapore at JLL, said: “Domestic investors were quiet because they are focused on diversifying exposure overseas. S-REITs were also less active as they have already completed many transactions in recent years.”