Outbound Asian real estate investment sees fall in 2018

Asian outbound real estate investment fell notably last year mainly due to a reallocation of portfolios by Chinese mainland investors, international property consultancy CBRE said.

Asian outbound real estate investment fell notably last year, mainly due to a reallocation of portfolios by Chinese mainland investors, international property consultancy CBRE said on Monday.

In 2018, a total of US$53.8 billion from Asia was invested into offshore real estate, a drop of 36 percent from 2017, according to CBRE's 2018 Outbound Investment Survey.

"On one hand, the Asian outbound investment story in 2018 was characterized by clear moderation from China's mainland," Leo Chung, associate director of research at Asia Pacific CBRE said. "On the other hand, it represented cyclical portfolio rebalancing and strategic preparation for future activity."

Chinese mainland investors, who transitioned to net sellers in the second half of the year to strengthen balance sheets and recycle capital for deployment into future outbound investments, deployed US$7.5 billion in capital into offshore real estate investments in 2018, a sharp decline from US$35.4 billion in 2017.

The pullback from Chinese mainland investors was not entirely unexpected, but encouragingly created opportunities for new strategic investors to amplify offshore investment activities, Chung said.

Throughout 2018, Singaporean and South Korean investors strengthened their positions as more visible offshore real estate investors, deploying US$21.6 billion and US$7.3 billion, respectively, against US$20.9 billion and US$6.3 billion in 2017. Investors from Malaysia and India also became more prominent by more than doubling and tripling their capital allocation into offshore real estate from a year earlier.

Geographically, EMEA (Europe, Middle East and Africa) remained the leading destination for Asian outbound capital in 2018, attracting US$21.5 billion in total. That was followed by intra-Asian investments at US$17 billion, the Americas at US$11.6 billion and the Pacific at US$3.7 billion.

London, which deployed 18 percent of total Asian outbound capital last year, continued to be the most sought-after location, given its strong fundamentals and established standing as the preferred metropolitan area for first-time buyers to invest. The appetite for gateway cities was also reflected in Hong Kong, Shanghai and Frankfurt, which received 9 percent, 9 percent and 4 percent of total Asian outbound capital in 2018, according to CBRE.

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