Singapore, 4 September 2018 - Asian outbound capital deployment remains robust amid a recent slowdown in Chinese outbound real estate investment. In the first half of 2018, outbound investment activity totaled US$25.3 billion, led by Singaporean capital, which accounted for 36% of the region’s total, according to recent data compiled by CBRE.
London continued to be a preferred destination for Asian investors, accounting for 26% of the region’s total outflows. Substantial funds flowed from both Hong Kong and Singapore into London to capitalize on the more favorable yields and longer rental periods presented by commercial properties that are unattainable domestically.
Yvonne Siew, Executive Director of Global Capital Markets, Asia Pacific at CBRE said, “Singaporean investors favored Europe as a location for portfolio diversification, investing US$3.4 billion into the region in the first half of 2018. Singaporean investors were also active in the US logistics sector, building a portfolio to the tune of US$2.27 billion during the period. Many of our clients in Singapore continue to look for opportunities in the region and beyond, particularly in the office and logistics sectors. For many of them, this is a long-term growth strategy as they seek to diversify their portfolios and enhance their yields given limited opportunities and compressed yields in the domestic market.”
Tom Moffat, Head of Capital Markets, Asia at CBRE commented, “Intra-Asian capital flows accounted for almost one third of global outbound investments made by Asian capital in the first half of 2018 at US$8.5 billion. The biggest beneficiaries of these capital flows were Hong Kong, China and Japan, but we expect several high-profile transactions in Singapore in the second half of the year.”
Despite the deceleration in Chinese outbound activity, it is expected that Asian investors will continue to be active abroad. Added Mr Moffat, “Asia Pacific investors are becoming increasingly recognized players and continue to expand portfolios strategically. The slowing of Chinese investment has prompted the emergence of more diverse capital sources, which illustrates the depth of liquidity and appetite for offshore deployment.”
In the first half of 2018, Chinese investors decelerated acquisition of overseas assets and began disposals, particularly in the US and Europe, to improve balance sheets and to lock in profit for their early investment. Disposals are expected to continue with some Chinese investors under finance strain looking to strengthen their balance sheet.
Property companies were the most active investor class and accounted for half of total Asian outbound investment, compared to 27% in the first half of 2017. REITs also accelerated outbound investment with two Singaporean REITs making their maiden investments in Europe. On the contrary, institutional investors, who accounted for 45% of the region’s total outbound activity in the first half of 2017, were less active this year and comprised 13% of the total.
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