Singapore leads in Asian outbound real estate investment for 2019

Singapore

AT US$15 BILLION, Singapore accounted for the highest outbound investment in real estate among Asian investors for the second year running in 2019, although investment volume was down by a third year-on-year owing to a lack of large portfolio transactions, a CBRE report said.

Asian outbound commercial real estate investment dropped 17 per cent year-on-year to US$45 billion last year, as Chinese investors continued to temper the pace of investments abroad in the face of capital controls.

But even as Chinese buyers pulled back, this was partly offset by a 66 per cent jump in outbound investment from Korea, which was the second-biggest Asian investor after Singapore.

Korean buyers spent US$12.5 billion, of which nearly 70 per cent went towards Europe partly due to low financing costs.

Paris proved to be a choice location for Asian investors, as the French city garnered US$4.9 billion in deals.

In the Asia-Pacific, cities such as Beijing, Shanghai and Sydney attracted commercial real estate investors from the region.

CBRE's head of capital markets (Singapore), Michael Tay said: "While office assets have been typically favoured by Singapore-based investors, it is observed that in 2019, there had been stronger interest among a select number of Singapore investors shifting to look for income-generating assets in alternative sectors such as student housing."

According to the report, office assets were the most popular as assets worth US$9 billion were scooped up by Singapore investors last year. Industrial and logistics assets were in second place at US$1.4 billion and residential assets (including student housing and multi-family) was in third at US$1.3 billion.

Among the investors last year were Mapletree Investments which bought two purpose-built student housing buildings in Coventry, UK for US$117 million, as well as a 25-storey apartment building in Chicago, CBRE highlighted.

Singapore Press Holdings - which owns The Business Times - in April last year acquired student accommodation assets in the United Kingdom for £133.7 million (S$236 million). In December, it announced the acquisition of more student accommodation assets in the UK worth £411 million.

Meanwhile, Parkway Reit bought three nursing rehabilitation facilities in Japan for 3.7 billion Japanese yen (around S$47.76 million).

Henry Chin, CBRE's head of research (APAC/EMEA), said: "In 2020, we expect commercial real estate investors in Asia-Pacific to continue seeking higher returns and portfolio diversification opportunities outside of their domestic markets. As the upward market cycle reaches maturity, it is projected that investors in the region will turn to assets with stable income streams."