Led by supersized Chinese institutions and Singaporean firms, Asians are no longer a novelty in either the UK or mainland Europe as they deploy billions in multiple markets.
London and office buildings remain in favour with many Asian investors, particularly Singapore-listed vehicles with a strong development background, despite the UK public's vote in June to leave the European Union.
Our monthly deal analysis for October saw Singapore firms UOL Group and UIC Overseas Investments, join forces to acquire an office and retail block in London's Midtown for £230 mln (€263 mln). The property at 120 Holborn, in the Farringdon area of the City of London, comprises 18,300 m2 of office and 14,100 m2 of retail premises.
New platform
Later that month, Chinese investment manager Cos Capital opened an office in London as a springboard for its strategy to deploy up to €1 bn into European property over a three-year period. The new arrival will likely face other major Asian investors who already have their feet on the ground in a wide range of European markets.
For instance, Anbang, a Chinese insurer with total assets of €109 bn, made a big splash in the Netherlands as the buyer of a 5-asset office portfolio from Blackstone, said to be valued at €500 mln, as the European property world met at Expo Real in Munich. The transaction was carried out by Vivat (formerly part of the nationalised SNS Reaal Bank), which Anbang acquired last year.
Blackstone bought a number of Dutch office assets between 2013 and 2015, when the Dutch market was bottoming out and a wave of opportunistic private equity entered the fray.
As the Dutch economy recovers and demand for office space grows, opportunistic property investors who bought into the market at the trough of the cycle have this year been cashing in on their gains and selling out. Prime office buildings in Amsterdam, for example, are now yielding about 5% compared with 4.35% in New York and 2.8% in Hong Kong.
Korean office buyer
While Anbang has more of a focus on hotels - both the bricks and mortar and the operating platforms - Samsung SRA, the asset management arm of Korean insurer Samsung Life, has manifested itself as a leading buyer of big-ticket core office properties in recent years. Its first deal in Europe came in 2013 when it acquired Commerzbank's offices at 30 Gresham Street in the City of London from Singapore's GIC for about €360 mln.
This October, Germany's Patrizia Immobilien confirmed it was acting for Samsung SRA when it acquired the 259-metre Commerzbank Tower in Frankfurt am Main. The investment volume is believed to have been in the region of €730 mln. Patrizia said it has invested around €1.3 bn in European real estate for Asian investors in the past 15 months. This includes the acquisition of the 36,000 m2 Astro Tower in Brussels for about €156 mln on behalf of a Korean consortium, which reportedly includes Korea Investment & Securities, in March.
The Czech Republic is another of the smaller European markets that has recently been the beneficiary of Asian capital – in this case without Patrizia as an intermediary. In early October it emerged that an unnamed Chinese investor had acquired the Radisson Blu Resort & Spa Sun Gardens resort in Dubrovnik for about €90 mln from Austria’s Erste Group Bank in what at the time was the largest hotel transaction of the year in Eastern Europe.
Big-ticket Germany
For Asian investors seeking the biggest tickets, Germany – which, according to RCA, surpassed the UK in terms of transaction volume in Q3 – remains the market of choice. In the third week of October, China Investment Corporation (CIC) established a strong presence in the thriving German residential rental market by backing Morgan Stanley’s €1.2 bn acquisition of 16,000 units from Luxembourg-based BGP Holdings.
Singapore's GIC likewise powered into Germany’s student accommodation market in early October via its joint venture with global student housing specialist GSA. The transaction included a portfolio of close to 1,000 student beds and a pipeline of 1,500 more.
As Europe's largest student market, Germany presents a significant opportunity for GSA's planned European expansion and the company has set an initial target of opening 10,000 beds. The German deal came shortly after GSA announced the biggest in a series of transactions over the past two years, acquiring The Student Housing Company and its UK portfolio of more than 7,000 beds in partnership with GIC.
This is just a taste of some of the big Asian real estate investors that made their mark in October. The full deal analysis will be published in the December issue of PropertyEU magazine.
Cormac Mac Ruairi
Senior Deals Editor
