Asian investors pump record cash into overseas real estate

Asian investors pumped a record amount of cash into overseas real estate last year and have signalled their intention to channel even more money into the sector in 2018. Investors across Asia put $83.4bn into overseas commercial property last year. The bulk — $35.5bn — flowed into Europe, the Middle East and Africa, more than doubling the previous year’s investment in this part of the globe, according to CBRE, a commercial real estate services company. Property has benefited from the deluge of cheap money following a decade of quantitative easing and record-low interest rates, as investors have sought higher yielding assets. Investing in overseas real estate has also been a popular way for Chinese investors to take money out of the country, which is subject to capital controls. Rob Blain, executive chairman of CBRE Asia Pacific, said real estate “has provided more stable returns over the past decade while also being less volatile, which is strengthening investor appetite”. The report comes as Chinese e-commerce group JD.com announced it is to start listing residential, high-end properties in the UK, Australia, Canada and the US on its site, providing its 300m customers with the opportunity to invest in bricks and mortar overseas. From next month the group will include apartments from Juwai, the international-focused online property company. Carrie Law, chief executive of Juwai, said: “We know there is tremendous pent-up demand for overseas real estate, with stability and diversification more important to most buyers than capital gains and yields.” According to a CBRE survey, 92 per cent of Asian investors, largely comprising institutions and fund managers, said they would invest the same amount or more than last year into commercial real estate in 2018. Mr Blain added: “Stable income streams and asset class diversification will ensure a continuation of robust real estate investment activity in 2018.” Tokyo is the top destination for investors in the year ahead, the survey indicated, while Melbourne and Singapore are also among the most popular cities for investment. Chinese property groups have been at the forefront of Asian investment into London, which reached a record high last year. Recommended Special Report Global property Global deal flow defies headwinds facing property investors Cheung Kei Group, the Chinese property developer, bought the former London home of defunct investment bank Bear Stearns at the end of last year. The group’s £270m purchase marked its second acquisition in the Canary Wharf area since July 2017. Although China still represents the largest investor base in Asia, Chinese outbound investment into real estate slowed substantially in the second half of last year following a move by the Chinese government to tighten scrutiny of overseas acquisitions. CBRE said that, as a result of new outbound investment regulations which came into force earlier this month, Chinese flows this year will probably be driven by “a stronger focus on Belt & Road countries and industry-related asset classes such as warehouses, supported by more flexible regulatory treatment”. “Investor demand for niche sectors will also continue to grow, underpinned by structural changes, higher yields and protection against real estate cycles,” added Henry Chin, head of research at CBRE Asia Pacific.