Asian investors to ramp up global real estate investments – CBRE

ASIA – Asian institutional investors are seen to be stepping up their international property investment over the next five years, ploughing more than $150bn (€113bn) primarily into gateway cities such as London, New York and Sydney, research from CBRE shows.

Faced with little investable stock on home territory, low interest rates and weak stock market performance, the cash-rich institutional investors are looking for real estate opportunities overseas, data from the property services provider indicated.

Asian institutional investors now hold 1.7% of their assets in real estate, compared with allocations to the asset class of 6-8% for their counterparts in North America and Europe, CBRE said.

But as they diversify into low-risk alternative asset classes, more Asian institutional investors are seen boosting their property allocations.

CBRE said a "conservative estimate" of the investors increasing allocations to between 2.5% and 3.5% in the next five years would mean a potential inflow of more than $150bn into the global property market, including direct and indirect real estate investment.

Between 2008 and 2012, acquisitions by Asian investors outside the Asia-Pacific region grew to nearly $9bn from $2bn, with institutions accounting for large part of the purchases, CBRE said.

Europe is the main focus for Asian investors followed by North America and Australia, it said.

In the last year, several Asian markets have made moves to liberalise outbound investment in the insurance sector, CBRE said.

The Chinese Insurance Regulatory Commission (CIRC) eased restrictions on overseas investment by domestic insurance companies in October 2012, and discussions are continuing in Taiwan about allowing domestic insurers to put money into property abroad.

Chris Ludeman, president of global capital markets at CBRE, said: "While investors that have already had exposure in global markets will continue to acquire new assets, the next few years will see a number of new entrants to leading global real estate markets such as London and New York."

The first groups to emerge would be Japanese institutions, which had so far stayed out of international property markets, as well as Taiwanese and Chinese insurance companies, he said.