Asian outbound RE surges 142%

Singapore and China were the most active countries, committing a combined $18 billion to international real estate in 2013 up from $5.8 billion in 2012.

Asian outbound investment in private real estate surged to $24.5 billion in 2013, a growth of 142 percent year-on-year with most of the increase coming from investors in Singapore and China, according to a recent joint report by property services firm CBRE and research firm Real Capital Analytics.

Singapore and China accounted for most of the growth with the former more than tripling year-on-year, reaching $9.7 billion in 2013. Chinese capital meanwhile followed a similar trend, with about $8.3 billion flowing into real estate investment in 2013, up on $3 billion in 2012.

Europe remained the most popular destination for Asian capital, drawing more than half of the total $24.5 billion. However, North America grew in popularity significantly last year, attracting $8.1 billion in investment up from $3 billion in 2012.

The gateway cities worldwide were the major targets for Asian investors. London alone hauled in more than $11 billion of Asian capital last year. New York was the second most popular city with $3.3 billion of investments, followed by Sydney, Singapore and Shanghai.

Despite the sharp increase in overseas investment in real estate, the report also pointed out that many Asian investors remain underweight towards property. Asia-based institutional investors control $12 trillion of assets in total, but currently allocation only 1.7 percent of that to real estate, including real estate in Asia.

“The lack of overseas investment experience, regulatory restrictions, limited investable stock and aggressive pricing have posed significant challenges for Asian institutional investors seeking to expand their portfolios within the region,” according to the study. “Regulatory liberalization will speed up the pace of outbound investment by insurance and pension funds.”

Indeed, CBRE head of research for Asia Pacific told PERE that outbound investment was likely to continue growing, given the interest of Asian sovereign wealth funds, insurance companies, private equity firms, high net-worth individuals and pension funds. “In general, the appetite for Asian investors [going] to the West has increased – due to the attractive yields and recovery story in the West,” he said.