Asian property investment in Europe confined to 3% of total

Asian investors will not solve Europe’s liquidity problems, delegates at the annual ULI conference in Paris heard last week. Asia-Pacific investors accounted for a mere 3% - or roughly EUR 3.5 bn - of total real estate investment volume in 2011, Menno Maas, head of CEMEA at DTZ, pointed out. In total, the London-based advisory firm recorded EUR 110 bn in transactions across Europe last year.

The majority of Asia-Pacific investors continue to target London, and to a lesser extent Paris and Berlin, Maas said. ‘Most investors have a narrow and sharp focus. I don’t have big expectations they will do any more than make a small contribution to real estate investment.’

Nevertheless, a seismic shift is taking place, argued Paul Vosper, head of client relations EMEA at RREEF. ‘The volume of Asian capital is dynamic in volume and source,’ he said, pointing to the Malaysians. In the past year, the Employees Provident Fund from Malaysia has become a household name in the London real estate sector, forking out more than EUR 700 mln on properties in the UK capital. ‘The Malaysians had nothing (in Europe ed.) prior to the crisis,’ Vosper pointed out. ‘It’s still early days for capital from Asia, but I think we will see it go to more locations and move further up the risk spectrum.’

It is no accident that the UK is the biggest recipient so far in Europe of Asia-Pacific money, Vosper added. ‘The UK is more transparent, has upward rental reviews and is accepting of capital flows. Half the office market is owned by foreign investors. No other market in Europe has that.’ Political willingness to accept Asian capital is a key driver behind the real estate investment flows into the UK, he continued. ‘That explains why some markets are more attractive to Asians than others. Political issues will need to be resolved as well as structural ones.’