Chinese top outbound property investments

Real Estate March 09, 2017 01:00

By   THE NATION

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ASIAN outbound real estate investment last year was dominated by Chinese investors, at 47 per cent or Bt987 billion, according to CBRE. 



Overall outbound investment activity by Asian investors remained robust with institutional investors continuing to lead investment activity, contributing to six of the top 10 biggest outbound deals of the year. 

“Chinese investors remain active in deploying capital offshore into global real estate assets. 

“Despite recent policies by the government restricting Chinese outbound investment, there continues to be a steady flow of Chinese capital overseas as investors seek to diversify their portfolios,” said Yvonne Siew, executive director of CBRE Global Capital Markets. 

“With more scrutiny on cross-border capital flows and rigorous checks by the government, which may lengthen the approval process, Chinese outbound real estate investment may moderate, gathering at a more sustainable rate. 

“Instead of larger transactions, Chinese investors may simply opt for a higher number of smaller deals. 

“Regardless, Chinese appetite for global real estate investment will remain solid but more cautious, with Chinese insurers and qualified asset managers being the active institutional investor class,” she said.

For the second straight year, the US remained the most favoured destination for Asian capital, drawing 43 per cent of the overall total, followed by EMEA at 27 per cent. 

Asia – with figures showing an increase of intra-regional activity this year – comprised 23 per cent of overall investment turnover, up from 21 per cent in 2015, which shows that Asian investors preferred to keep more capital within their own region. 

New York surpassed London as the top metropolitan destination for outbound investment in 2016, however, it contributed to a smaller share compared to 2015. 

The top five destinations – New York, London, Hong Kong, Seoul and Sydney – contributed 37 per cent of the total, a decrease from 42 per cent. 

“Asian investors are now showing more interest and seeking out assets in more diverse markets globally. 

“Compared to 2015, more capital was deployed to alternative gateway cities in search of attractively priced opportunities. 

“Places in continental Europe such as France and the Netherlands; Chicago, San Francisco and Washington in the US; and Vancouver in Canada are now on more investor radar screens,” said Robert Fong, director of research at CBRE Asia-Pacific. 

“While China, Singapore, Hong Kong and South Korea are still the four major sources of outbound investment capital, we are seeing emerging activity from other markets, such as India. 

“There was a significant uptick of Japanese investment targeted mostly for the US. We expect Japan to step-up overseas investment in the year ahead as they are coming off a low base,” he said. 

James Pitchon, head of research and consulting at CBRE Thailand, said Thailand is seeing more inbound property investment from Asian investors primarily in condominium development.

Four investors are from Japan – Mitsubishi Estate with AP (Thailand), Mitsui Fudosan with Ananda Development, Hankyu Realty with Sena Development and Shinwa Group with Woraluk Property.

Last month, Singha Estate Plc and Hongkong Land Group signed a shareholders’ agreement to form a joint venture, S36 Property Co, to develop a super-luxury condominium in Bangkok on the corner of Sukhumvit Soi 36.

Thailand is also seeing more outbound investment including Land and Houses purchasing apartments for rent in California in 2012 and 2015,

In a major cross-border acquisition from a Thai company, Singha Estate Plc formed a JV with Fico Corporation to buy the British Jupiter Hotels portfolio of 26 Mercure-brand hotels for almost Bt8.6 billion from Patron Capital and Royal Bank of Scotland.