Daily Management Review

Most Active Buyers Of Commercial Property Are Asian Investors, Despite Chinese Slowdown


Most Active Buyers Of Commercial Property Are Asian Investors, Despite Chinese Slowdown
Despite the slowing of outbound investments from China, in the first half of the current year 20 per cent of all global assets disposed by global funds were amassed by Asian investors making them the most active net buyers of commercial property.

According to international property consultant JLL, one-fifth, or $6.3 billion of office, hotels and retail space sold by global funds were bought by investors primarily form the Asian countries of Hong Kong, Singapore, Japan and South Korea. The global funds were also the largest net sellers of commercial real estate between January and June with a total worth of $31.5 billion.
“As outbound investment from China slowed, investors from Hong Kong, Singapore and South Korea stepped in to provide liquidity, demonstrating the depth of the buyer pool from the region.” JLL said in a report.
During the same period, there had been a record $81 billion in investment volumes in Asia-Pacific.
Hong Kong had become the third most active city in the world with the sale of his tallest office building, The Center, for $5.1 billion, by tycoon Li Ka-shing. In the city the total volume of transactions was $14.6 billion in the first half of the year compared to US$5.8 billion in the same period last year.
“Strong economic growth of the major Asian cities drove investors’ confidence in the real estate sector,” said Reeves Yan, executive director, capital markets and investment services, Colliers International Hong Kong.
The driver of the growth was increased number of deals made by Singaporean and South Korean investors
“The slowing of Chinese investment has prompted the emergence of more diverse capital sources. Singapore, Japan and Korea-based investors have seized the opportunity to expand offshore real estate portfolios as Chinese investors pull back,” said Tom Moffat, head of capital markets for Asia at commercial real-estate brokerage CBRE.
According to Stuart Crow, head of Asia-Pacific capital markets at JLL, Europe is now the preferred destination for Asian investors, who earlier looked to purchase commercial properties in the US. This shift is because of pricing pressures in core markets and rising hedging costs.
“This has been particularly the case for South Korean investors, who are more likely to hedge than other investors. In fact, South Korean purchases in Europe were double those made in the US at the half-year mark in 2018,” Crow said.
The shift in trend was also acknowledged by Moffat of CBRE.
“Korean investors are quite active in Europe, but have scaled back direct investments in the US, instead focusing more on real estate debt investments in the world’s largest economy,” he said.
Asian investors are also making large investments in Asia and cities like Seoul and Shanghai have witnessed more Asian investors buying up commercial property mainly because of a steady stream of income such properties provide. 
Japan and South Korea were identified as popular destinations for investment by Collier’s Yan because of high yield in the commercial real estate.
“Asia-Pacific’s property markets continue to perform well, despite global political and economic uncertainty,” Crow said.