Singapore leads Asian outbound investments in 1H 2018: CBRE

Singapore

SINGAPORE investors led the region in outbound investment activity for the first half of 2018, with their capital output of US$8.9 billion accounting for 36 per cent of Asia's total, according to data compiled by CBRE.

Europe was a favoured destination for Singapore investors, who poured US$3.4 billion into the region. They also funnelled a total of US$2.27 billion into the US logistics sector, CBRE said in a press statement on Tuesday.

"Many of our clients in Singapore continue to look for opportunities in the region and beyond, particularly in the office and logistics sectors," said Yvonne Siew, executive director of global capital markets, Asia Pacific at CBRE.

"For many of them, this is a long-term growth strategy as they seek to diversify their portfolios and enhance their yields given limited opportunities and yields in the domestic market."

Among Asian investors generally, London was the top destination city, receiving 26 per cent of the US$25.3 billion in Asian outflows.

A substantial amount of the funds came from Hong Kong and Singapore, as investors capitalised on the city's more favourable yields and longer rental periods for commercial properties that are unattainable domestically, said CBRE.

Tom Moffat, CBRE's Asia head of capital markets, noted that about one third, or US$8.5 billion, of Asian outbound investments went to other Asian countries.

"The biggest beneficiaries of these capital flows were Hong Kong, China and Japan, but we expect several high-profile transactions in Singapore in the second half of the year," he said.

In the first half of 2018, Chinese investors acquired fewer overseas assets and started disposing of assets in the US and Europe in particular. Their outbound investments totalled US$5.2 billion, compared with US$26.3 billion in the first half of 2017.

CBRE said the investors were looking to improve balance sheets and lock in profit for their early investment, and it expects disposals to continue, as some Chinese investors remain under financial strain and need to further strengthen their balance sheets.

Overall, Asian outbound capital deployment has remained robust and Asian investors will likely continue to be active overseas, despite the slowdown in real estate investment from the Chinese market, said CBRE.

"Asia Pacific investors are becoming increasingly recognised players and continue to expand portfolios strategically," said Mr Moffat. "The slowing of Chinese investment has prompted the emergence of more diverse capital sources, which illustrates the depth of liquidity and appetite for offshore deployment."