While outbound investment flows continue from Asia, we’ve seen a recent shift in where the capital has been coming from.
Previously dominant Chinese investment has slowed down due to capital controls and a pull back from insurance groups, with other markets notably Singapore now becoming the most active outbound investors.
London continues to be a popular destination for Singapore capital and in the first half of 2018 26% of outbound deals from Asia were into this market. We’ve seen other European markets such as Germany and the Netherlands become more popular particularly for logistics investments, and in H1 2018 Singaporean investors placed $3.4 billion across Europe. The U.S. and Australia also saw significant inflows.
A lot of outbound capital is staying within Asia with around $8.5 billion of assets or a third of total outflows invested by Asian groups back into the region in H1 2018. Hong Kong, China and Japan were the most popular destinations with Vietnam also seeing an uptick in activity. Hong Kong is one market where investors from Mainland China continue to play a big part in the market.
The Asian outbound flow has been led by developers and real estate operating companies with this part of the market making up 49% of regional outbound investors in the first half of this year versus 27% of the market this time last year.
We’ve seen investors from Korea and Hong Kong featuring prominently alongside Singaporean groups, with some consistent themes of diversification, desire for higher yielding assets and in some cases longer secure income streams.
By Tom Moffat, Executive Managing Director, Head of Capital Markets Asia, CBRE.