After a muted year in 2020, Asian outbound commercial real estate investment surged 69% year-on-year (y-o-y) in 2021 to US$54.6 billion, surpassing 2019’s pre-pandemic volume, according to data from CBRE.
Singaporean capital dominated Asian outbound investment, with six out of the top 10 outbound transactions.
Singaporean investors deployed US$32 billion abroad, marking a significant increase of 164% y-o-y. The U.S. was the preferred destination for Singaporean capital, with appetite strongest for logistics portfolios.
Hong Kong investors also stepped up purchasing as the second most active source of Asian outbound capital with US$6.7 billion invested in 2021 representing a 60% y-o-y rebound.
“Investors from Singapore and Hong Kong were the most active due to the size of their markets and available liquidity. The United States was the preferred international market for Asian investors due to attractive US dollar hedging costs and its robust economy relative to Asia as business travel normalises,” said Greg Hyland, Head of Capital Markets, Asia Pacific for CBRE.
The top destination markets for Asian investors also included Australia, Mainland China, the United Kingdom and Japan.
The UK was the only European market to record a significant inflow from Asian capital in 2021, with more investors shifting their emphasis back to the Asia Pacific region, where they can rely on stronger networks and local expertise to execute and evaluate deals.
Asian outbound investment in industrial and logistics assets reached US$24 billion in 2021, surpassing office investment for the first time and further compressing global industrial yields, which dropped to 3.7% in Q4 2021.
Investment activity within the Asia Pacific region saw Hong Kong cross-border investors focus on retail and office assets in mainland China, while Korean institutional and real estate investment funds favoured office assets in Australia and the U.S.
“The majority of Asian investors are expected to deploy more capital this year with a particular focus on North America and regional gateway markets, such as Tokyo, Shanghai and Sydney. As a result, we expect cross-border investments to grow by up to 10% to US$39 billion in 2022,” said Dr. Henry Chin, Global Head of Investor Thought Leadership and Head of Research, Asia Pacific for CBRE.
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