Asia investors spark 2017 record global real estate investments

Asian investors powered global real estate spending to an all-time high last year and are likely to dominate the market this year, according to a new report out yesterday.

It found that investors from the region accounted for more than half of the record US$1.62 trillion (S$2.12 trillion) of capital deployed for all kinds of property investments globally last year. Asian buyers were also responsible for 46 per cent of all cross-border investments, said the Cushman & Wakefield report.

But while investors from the Asia-Pacific increased their exposure to most markets, the United States was a notable exception as a range of factors, including the stage of the market cycle, uncertainty over US policies and domestic capital controls in China, all combined to deliver a fall in activity.

America's loss was Europe's gain, however, as investment from Asian sources grew by 96 per cent year on year, mainly due to several very large-scale transactions, including acquisitions preparing the way for the implementation of China's Belt and Road Initiative.

There had been speculation that European and American political populism would result in a less adventurous investment community and a strengthening of domestic purchasing, but local buying in both Europe and North America decreased in 2017.

The global increase in domestic investment was driven exclusively by Asia-Pacific buyers of residential properties, whose investments rose 39.9 per cent year on year.

The US remained the main individual target for international investors but its lead fell. Europe as a whole was strongly ahead of North America, attracting 50 per cent of all cross-border spending.

London remained the most sought-after city despite concerns over Brexit. Investors were buoyed by the city's long-term appeal and the decline of the pound, making property more affordable for foreign investors.

Chinese cities remained dominant in Asia with Beijing outperforming Shanghai, which had been 2016's preferred market. Volumes in Beijing more than doubled year on year.

Report author David Hutchings, Cushman & Wakefield's head of Europe, the Middle East and Africa investment, said: "Perhaps the strongest reason for cheer at present is the health of the economy and the globally synchronised nature of the upturn we are seeing.

"The increase in real estate development and forward funding in 2017 shows that investors already recognise this but the strength of the occupier market may yet surprise in the year ahead."

Mr Hutchings warned that "trade wars could knock us off-course", but noted that solid economic momentum and tighter labour markets will encourage more business investment so "the cycle is still likely to be extended".

A version of this article appeared in the print edition of The Straits Times on March 16, 2018, with the headline 'Asia investors spark 2017 record global real estate investments'. Print Edition | Subscribe