INVESTORS from Asia powered global real estate investments to an all-time high in 2017, and are likely to dominate the market in 2018 as the range of capital sources within the region continue to increase, according to a report by Cushman & Wakefield on Thursday.
The findings come from its Global Investment Atlas 2018 study which found that Asian investors accounted for 52 per cent of the record US$1.62 trillion of capital deployed for all kinds of property investments globally last year, which topped 2016’s US$1.43 trillion.
Asian buyers were also responsible for 46 per cent of all cross-border investments.
But while investors from the Asia-Pacific increased their exposure to most markets, the US 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.
North America’s loss was Europe’s gain however, as investment from Asian sources grew by 96 per cent year-on-year, mainly due several very large-scale transactions, including acquisitions preparing the way for the implementation of China’s Belt and Road Initiative.
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Contrary to the conviction of some that European and American populism would result in a less adventurous investment community and a strengthening of domestic purchasing, local buying in both Europe and North America decreased on the year with the global increase in domestic investment driven exclusively by Asia Pacific buyers of residential properties, whose investments rose 39.9 per cent year-on-year.
In terms of countries, the US remained the main target for international investors but its lead fell and, as a regional, Europe was strongly ahead of North America, attracting 50 per cent of all cross-border spending.
In terms of cities, London remained the most sought after destination for international capital despite concerns arising over Brexit as investors were bouyed by the city’s long term appeal and the decline of the pound, making property in the United Kingdom more affordable for foreign investors.
Among Asian cities, Chinese cities remained dominant with Beijing outperforming Shanghai, which had been 2016’s preferred market; with volumes in the former increasing more than doubling year on year, Cushman said.
Outside of China, transactions across emerging Asia suggested optimism among investors “with flows into Indonesia and Malaysia magnified and India seeing record volumes for standing investments despite the dampening economic impact of demonetisation”, said the report.
Report author David Hutchings, Cushman & Wakefield’s head of EMEA 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.”
He added: “Trade wars could knock us off-course but as solid economic momentum and tighter labour markets encourage more business investment, the cycle is still likely to be extended. It could be boosted further by the successful adoption of new technology and ways of working. At the same time, we are likely to be at the start of a rising trend in inflation, but the pace of interest rate tightening should remain slow and policy will be stimulative for much of 2018.”
* The Business Times