Asia Pacific Investment Booming, by CBRE

File Type: Free Content, Article
Release Date: April 2014
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A significant majority of investors expect to commit more capital to the Asia Pacific real estate market in 2014 compared to 2013, according to CBRE’s Asia Pacific Investor Intentions Survey 2014, which gauges the outlook and appetite of real estate investors in the region for the remainder of the year. Carried out during January and February, the survey included a wide range of real estate investors, including fund and asset managers, private equity firms, banks, insurers, private property companies and REITs. Although most respondents were from the Asia Pacific region, the survey also included global investors headquartered elsewhere.

Total real estate investment turnover in Asia Pacific for 2013 reached $90.4 billion, a 24 percent year-on-year increase and the highest figure recorded since CBRE began collecting data in 2005. A majority of respondents indicated that they will continue to commit more capital to the Asia Pacific real estate market, with 64 percent expecting their purchasing activity to be higher than in 2013.

In terms of markets, “Emerging Asia” and “Developed Asia” topped the global list of preferred regions in which to invest, with 23 percent of investors saying they targeted each. Investors also showed strong interest in North America (20 percent) and Western Europe (16 percent).

The office sector is the most popular market sector for investment (32 percent), followed by industrial and logistics (29 percent) and residential (21 percent). Strong interest in industrial and logistics assets is driven by the sector’s comparatively better yields and strong demand for modern logistic facilities across the region.

Within Asia Pacific, China is the preferred destination for cross-border investors (excluding respondents investing within their own “market of domicile”), followed by Australia and Japan. Investment appetite in Hong Kong appears to have weakened, as cross-border investors continue to face double stamp duty measures and high pricing. Investors thus are chasing assets or markets that offer higher returns, such as China and Japan. 

Other interesting trends revealed by the survey include the following:

  • Investors continue to display a strong preference for gateway cities such as Sydney, Tokyo and Shanghai.
  • Investors are polarized at both ends of the risk curve. Some indicated that their preferred asset type is “opportunistic/value-added” and others prefer “prime/core” assets, while relatively fewer are opting for secondary assets.
  • Investor appetite for secondary assets is increasing, however, as buyers are deterred by the aggressive pricing for prime/core assets and look to capitalize on the pricing gap between core and secondary locations.