London Remains Top Destination for Asian Outbound Capital
London remained the top destination for Asian outbound capital in 2018, according to the latest report from global real estate advisor, CBRE. In 2018, 18% of total outbound investment targeted London, up from 13% in 2017. Investors from Hong Kong, Singapore and Korea were the major buyers, accounting for over 85% of total investment activities.
EMEA remained the leading regional destination for outbound capital, attracting €21.5 billion in total capital from Asian investors in 2018. Intra-Asian investments finished 2018 at $17 billion, followed by the Americas at $11.6 billion and Pacific at $3.7 billion.
Despite allocations into London increasing in 2018, total Asian outbound real estate investment noticeably moderated for the full year 2018. This was driven primarily by a reallocation of portfolios by Chinese investors. Throughout 2018, a total of $53.8 billion in capital from Asia was allocated into offshore real estate by investors, according to CBRE, a decline of 36% year-on-year.
In 2018, Chinese investors rebalanced real estate portfolios, becoming net sellers of real estate in the second half of the year, in order to strengthen balance sheets and recycle capital for deployment into future outbound investments. Chinese investors deployed $7.5 billion in capital into offshore real estate investments in 2018 versus $35.4 billion in 2017.
The Asian outbound investment story in 2018 was on one hand characterized by a clear moderation from China but on the other hand, represented cyclical portfolio rebalancing and strategically preparation for future activity. The pullback from China’s investors was not entirely unexpected but encouragingly created opportunities for new strategic investors to amplify offshore investment activities.
Throughout 2018, Singaporean and Korean investors solidified their positions as more visible offshore real estate investors. Singapore-based investors deployed a total of $21.6 billion in 2018 against $20.9 billion in 2017. Korean investors allocated $7.3 billion in capital last year versus $6.3 billion in 2017. Investors from Malaysia and India also became more prominent in 2018, selectively investing more capital overseas, up 132% and 291% respectively.
Asia Pac investors remain committed to further offshore acquisitions but we have seen them being more cautious awaiting better visibility on the outcome of Brexit. London has long been the top destination for Asian capital owing to its strong fundamentals and established status as a leading global gateway city. London’s resilience cannot be underestimated.