London remains the preferred destination for outbound Asian capital, accounting for 26% of the region's total property investment outflows of $25.3 bn (€21.7 bn) in the first half of the year, according to the latest research from CBRE.
Substantial funds have flowed from both Hong Kong and Singapore into London in recent months to capitalise on the more favourable yields and longer rental periods presented by commercial properties that are unattainable domestically, the report said.
Singaporean investors favoured Europe as a location for portfolio diversification, investing $3.4 bn (€2.9 bn) into the region in the first half of 2018. They were also active in the US logistics sector, building a portfolio to the tune of $2.27 bn during the period.
'Overall, we anticipate that Singaporean, Korean and Hong Kong investors’ strong investment appetite, particularly in Europe and the US, will continue to be a key propellant of Asian outbound investment in the medium to long term,' said Henry Chin, head of research, Asia Pacific at CBRE.
Chinese volumes slowing
In the first half of 2018, outbound investment activity for the whole region totalled $25.3 bn, led by Singaporean capital, which accounted for 36% of the region’s total, according to the CBRE data. Chinese outflows slowed as many Chinese firms pursued a disposal strategy to improve balance sheets and lock in profit from their early investments.
According to CBRE, Chinese disposals - particularly in the US and Europe - are expected to continue with some Chinese investors under financial strain and seeking to comply with altered legislation about overseas assets.
Property companies were the most active investor class and accounted for half of total Asian outbound investment, compared to 27% in the first half of 2017. REITs also accelerated outbound investment with two Singaporean REITs making their first investment in Europe.
On the contrary, institutional investors, which accounted for 45% of the region’s total outbound activity in the first half of 2017, were less active this year and comprised 13% of the total.
