Australia, Japan, China Top APAC Destinations for Cross-border Investors; Appetite to Invest Outside Asia Pacific Strengthens
Singapore, March 14, 2016 – CBRE reveals the results of its Asia
Pacific Investor Intentions Survey 2016, which analyzes the outlook and
appetite of Asia Pacific real estate investors for the rest of the year.
Overall buying intentions among Asia
Pacific real estate investors remain positive with around 80% of survey
respondents indicating they plan to buy at a similar level to, or more than
2015. Despite less respondents intending to increase purchasing activity in
2016—only 42 per cent of respondents plan to purchase more this year, compared
to 54 per cent in 2015 and 64 per cent in 2014—the majority of investors still
expect to buy more than they sell.
“Asia Pacific will continue to
remain an attractive, key growth market for investors, underpinned by rapid
urbanization and economic growth levels that outpace global averages,” said Ada
Choi, Senior Director of Research, CBRE Asia Pacific. “As the region’s real
estate market has seen an active couple of years, which saw record-breaking
investment turnover and big ticket portfolio transactions, we are starting to
see softening investor sentiment in 2016 with moderated buying intentions for
the second consecutive year. This is most likely due to increased concerns over
the regional and global economy, high asset prices and also limited
availability of assets for sale.”
A greater number of respondents (58
per cent) identified the domestic and global economy as the greatest threat to
the Asia Pacific real estate market this year, compared to last year’s 29 per
cent. There is also a growing concern on asset pricing with 38 per cent of
respondents identifying this as the biggest obstacle to acquiring assets, an
increase from 31 per cent in 2015. Nevertheless, respondents selected capital
value growth as their main motivation for investing in real estate.
Availability of assets is seen as the second biggest obstacle, though this has
reduced from 21 per cent in 2015 to 16 per cent in 2016.
Investors Moving Up the Risk Curve
Given the increased uncertainty
regarding the economic outlook, core assets remain the most preferred asset for
investors, followed by value-added assets. However, demand for core assets fell
from 43 per cent in 2015 to 33 per cent this year, whereas there was stronger
interest in value-added assets and good secondary assets.
Preferred Asset Type
Note: Good secondary refers to Grade
B assets in core locations or Grade A assets in non-core locations.
Source: CBRE Asia Pacific Investor
Intentions Survey 2015 and 2016
“The pricing of prime core assets
and investors’ desire for high returns suggests that investors intend to move
up the risk curve this year,” said Richard Kirke, Managing Director, Capital
Markets, CBRE Asia Pacific.
“Institutional investors, which have
looser return requirements, will focus on prime core assets for long-term holds
whereas demand for value-added assets continues to be led by real estate funds
and REITs. Experienced institutional investors, especially major sovereign
wealth funds, are increasingly moving into development projects and into
emerging Asian markets for higher returns,” Mr Kirke adds.
Breakdown of Preferred Markets, Sectors
Within Asia Pacific, findings reveal
that cross-border investors continue to focus on Australia, Japan
and China; collectively, these three markets account for about 60 per
cent of respondents’ interest. Australia remains especially popular among Asian
investors, in particular Chinese and Singaporean investors, whilst foreign
investor interest in Japan is also strong, led mainly by North American
investors. Even though investment interest in China declined amongst
international investors—on the back of the country’s economic slowdown, stock
market volatility and currency depreciation—sentiment among domestic investors
remains relatively firm. Driven by improving economic fundamentals, several
emerging Asian markets such as India and Vietnam also regained
investors’ interest this year.
The office sector retained its
position as the most preferred sector for investment (32 per cent of
respondents) for the third consecutive year. Continued business growth in Asia
Pacific, especially by the service sector, supported solid investment demand
for prime assets in this sector. Logistics follows as the second most
attractive investment sector. However, hotels and resorts have seen a
particularly significant surge in interest, jumping from just 1 per cent in
2014 to 14 per cent in 2016. Demand in this sector is particularly strong in
Australia and Japan, where weaker currencies have supported strong growth in
tourism arrivals, especially from China.
Preferred Sector for Investment
Source: CBRE Asia Pacific Investor
Intentions Survey 2014, 2015 and 2016
Investors seeking higher yields will
continue to turn to alternative sectors in 2016—67 per cent of respondents are
actively pursuing alternative sectors this year. Real estate debt (20 per cent)
remains the most attractive asset type, followed by student housing (17 per
cent), healthcare (16 per cent) and retirement living (16 per cent).
Self-storage and data centers also received stronger interest from investors
this year compared to 2015.
Interest in South East Asia Rose
Survey results for respondents keen on South East Asia showed a slightly
different picture. 20 per cent of cross border investors polled expressing
interest to buy assets in the region, particularly in Singapore and Vietnam in
2016, compared with 17% in 2015. Residential projects, in particular multi
family and assets with lease potential, are deemed to be the most attractive
for cross border investors keen on South East Asia. The same investors have
also indicated a preference for student housing (28 per cent), followed by real
estate debt (17 per cent) in terms of alternative assets they are actively
Outbound Investment Growing in
Asia Pacific investors are
demonstrating a stronger appetite for outbound investment this year with 42% of
respondents intending to invest outside the region, up from 31 per cent in
2015. South Korean investors retained the most positive attitude towards outbound
investment, followed by Singaporeans. Asian institutional investors continued
to lead outbound investment among the different investor types.
“The search for higher income
returns and access to a larger pool of core assets are the key reasons behind
overseas real estate investments, especially among Asian investors.
Consequently, Asia Pacific investors overall are broadening their interest from
Asia to the rest of the world. Asia Pacific investors plan to invest more
capital internationally in the coming year than last year, which is in contrast
to the softer investment intentions displayed by respondents within the region
itself,” said Mr Kirke.
CBRE’s Asia Pacific Investor
Intentions Survey 2016 was compiled from around 350 responses and was carried
out online between January-February 2016. The survey covers a wide range of
real estate investors, including funds or asset managers, property companies,
institutional investors, listed property companies and REITs. Around 80 per
cent of respondents are companies domiciled in Asia Pacific and 20 per cent are
domiciled outside of this region.
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.