Cross-border real estate investment in the Asia Pacific region could achieve a record high this year as foreign investors shore up interest and seek assets in greener pastures beyond borders.
As it stands, year-to-date intra-regional cross-border transaction volumes have already exceeded the previous 10-year record high in 2015 (1Q15-3Q15) by 30 per cent, and is currently a 21.8 per cent step up from its 10-year average (2007-2016).
Singapore the main source of intra-regional capital
Chinese would be the largest group of foreign investors if inter-regional flows were part of the picture. But in the context of intra-regional capital flows (which only considers deployment within Asia Pacific), Singapore continues to dominate with year-to-date foreign investments currently standing at US$5.6 billion.
China (US$2.1 billion) and Hong Kong (US$2.9 billion) were ranked second and third respectively given a significant portion of capital are recycled between the two closely-integrated countries.
These three countries make up 85 per cent of total source of foreign capital within the region.
Singapore has been the dominant outbound purchaser for a long period now and the momentum will continue, as investors remain keen on increasing their exposure in emerging markets.
Office assets remain top picks for investors
Much of the capital from these countries is allocated to office assets. From the standpoint of Singapore investors, most are seeking to plough capital in gateway cities such as Melbourne and Sydney, which offer steady and attractive income streams.
79 per cent of Singapore capital has been allocated into outbound office assets, with 11 out of 18 of the office assets acquired based in Australia. One such cross-border deal is the acquisition of 206 million Telstra Plaza building by Singapore’s ARA Asset Management and co-investment vehicle Straits Real Estate.
While 45 per cent of China capital is allocated to office assets, most are flowing into Hong Kong strata-titled opportunistic assets, with a focus on capital growth.
Figure 1: Allocation of intra-regional cross border capital outflow by asset classSource: JLL
Australia and China most popular for foreign investors
Australia and China draw the most foreign investments given assets in those markets generally offer more attractive yields. But relative to domestic purchasers, (Figure 3) India stands out with 65 per cent of its total transactions coming from foreign investors (all of which were Singapore based institutional funds investors).
One notable example was Singapore sovereign wealth fund GIC’s US$1.4 billion joint venture with DLF Cyber City Developers, which also happened to be the largest cross border deal year-to-date.
These investors are looking to ride the investment wave via debt deals and joint ventures with local partners, as the market continues to grow in depth and demonstrates their willingness to shift from traditional markets if the opportunity presents itself.
For more insights on capital…
Bangkok falls 19 places to 49th most expensive location worldwide
Locations reliant on international tourism have seen their rental markets hit especially hard during the pandemic, resulting in some major drops in the rankings. Bangkok has fallen 19 places to 49th, while Hanoi saw a similar drop of 12 places to 81st.
Is There a Silver lining amid COVID-19?
Thinking of the future impact of this pandemic on office buildings, it may have already dawned on many of us that a majority of potential long-term trends and health measures will become permanent work-life features in the times to come.
Thailand Approves Package to Attract Wealthy Foreigners and Professionals
Thailand’s Cabinet has approved an economic stimulus and investment promotion package aimed at attracting wealthy foreigners and highly skilled professionals...
The Role of Telemedicine Today: During and Beyond the COVID-19
Lockdowns, quarantine periods, and hospitals fast filling to the brink needed the medical community to come up with solutions fast....
Malaysia, Thailand banks to join the ASEAN Banking Integration Framework
Banking institutions from Thailand and Malaysia are invited to join the ASEAN Banking Integration Framework and indicate their interest to...
Climate Change Could Force 49 Million People to Migrate in East Asia and the Pacific
Out-migration hotspots in agricultural areas of central Thailand and Myanmar coincide with areas expected to see declines in both water...
Thailand BOI Approves Measures to Support Carbon Reduction
greenhouse gas emission as well as an enhanced scheme for electric vehicles and measures to mitigate Covid-19 impacts and support...