Chinese, Korean investors target Eurozone markets, execs say

The Eurozone is the number one real estate investment destination for Asian investors, Icade's Chief Executive and EPRA Chairman Serge Grzybowski said during a recent Asian Investor Outreach tour organized by the European Public Real Estate Association (EPRA).

Chinese and South Korean investors are focusing their real estate investment strategies on the Eurozone’s property markets as they seek to diversify their investment portfolios, they noted.

'They consider that they already have an overweight allocation to the US and London, so the shift to the Eurozone is also part of a rebalancing of their property portfolios,' added Grzybowski. 'They are interested in the listed property sector, which they see as offering attractive dividend yields.'

The chief executive of Icade was taking part in a tour with one-on-one meetings with Chinese and South Korean pension funds, insurers, investment managers, property companies and sovereign wealth funds representing global assets of $1.64 tln.

Asian investors made €11.3 bn of direct property investments in Europe in the 12 months through March 31 this year, according to data compiled by Real Capital Analytics, while China was the largest source of Asian capital deployed in Europe’s direct property investment markets last year.

Chinese insurers are beginning to start making real estate investments outside their domestic market for the first time following regulatory changes last year. China’s regulator also permitted insurance companies, which have a total of RMB7.4 tln (€900 bn) across all investment asset classes, to increase their allocation to infrastructure and real estate to 20% from 10% previously.

Chinese and Korean investors indicated that they are investing in listed real estate companies as part
of their property investment allocation, since they recognize that this is a liquid, cost effective and efficient way of increasing their exposure to the Eurozone, noted Foncière des Régions' CEO and head of the French Property Federation (FSIF) Christophe Kullmann.

Unfamiliarity with Europe’s listed property companies, their business strategies and management teams is the main reason why the Asian institutions favour investing through third parties rather than directly, the executive said, adding that this may change through regular contact between the companies and the investors.

'These investors have significant sums of capital to deploy and there was a real interest and desire from them, expressed during the EPRA meetings, to go into the Eurozone. Some clearly said that they will invest directly in listed European property companies,' added Kullmann.