Asian buyers play vibrant part in real estate investment globally

Appetite for real estate investment around the world rises in the second quarter of this year

Investors allocating more capital in overseas real estate 

APPETITE for real estate investment around the world rose in the second quarter of this year with Asian buyers playing a vibrant role, data released today by JLL, an international property advisor, showed.

Inter-regional investment in real estate totaled US$19.5 billion between April and June, up 71 percent from the same period a year earlier.

In the first half of this year, the Chinese mainland was the third biggest source of cross-border capital in real estate globally at US$6.2 billion, behind Germany and the UK. The other biggest spenders in the region were Hong Kong at US$4.9 billion, Singapore at US$4.1 billion, South Korea at US$1.9 billion and Japan at US$1.6 billion, according to JLL.

In what could be the biggest single asset deal of the year, Chinese mainland conglomerate HNA Group acquired 245 Park Avenue, a Midtown office tower in the US, for US$2.21 billion in May.

"The purchase underscores the continued prominence of Chinese capital in global real estate markets despite capital controls," said David Green-Morgan, director of global capital markets research at JLL."Given this is the first wave of Chinese capital going global, it remains concentrated on the biggest, most liquid markets in the world."

Asian investors actually allocated almost all of their capital into the world's three largest and most liquid real estate markets during the first six months of this year, namely the US, UK and Germany, which received US$10 billion, US$6 billion and US$2 billion, respectively.

Even as they channeled more capital into real estate overseas, Asian investors were still keen to hunt for deals within their own countries, with domestic investments totalling US$49 billion in the second quarter in Asia Pacific. In particular, domestic demand continued to drive the Chinese mainland real estate market with foreign buying interest on the rise, taking up a third of total transaction volumes in the second quarter.

"With the capital curbs making it harder to invest outside of China, domestic investors, particularly developers, will aim to invest more inside the country," Green-Morgan said. "With rising prices in Tier 1 cities, investors are starting to look at Tier 2 cities for good retail and logistics assets, as well as those with potential for conversion, such as retail into office space, or hotels into serviced apartments."

Globally, the office sector remains the top choice for investors. The industrial sector was the next most sought-after asset, with US$24 billion invested in the second quarter, or a year-over-year increase of 28 percent.

Between April and June, real estate investment in Asia Pacific climbed 6 percent quarter on quarter to US$31 billion and transaction volumes around the globe rose 7 percent to US$153 billion, according to JLL data.

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