SINGAPORE, 27 March 2017 – Domestic investors were active across most Asia Pacific real estate markets in 2016, as many looked to purchase real estate assets at home amid global political and economic volatility. Chinese investors ploughed a total of US$29.1 billion into domestic real estate assets, a 50 per cent increase year-on-year, while domestic investment in South Korean real estate surged 75 per cent to US$12.4 billion.
“Looking at the figures, it’s clear that investors flexed their domestic purchasing power in 2016,” said Myles Huang, Research Director, Asia Pacific Capital Markets at JLL. “In China, Hong Kong, Korea and Japan, we saw an increase in the volume of domestic deals in 2016, spurred by strong in-country opportunities as well as many institutional investors allocating more money to the real estate asset class in general.”
“Chinese investors, however, were also strong cross-border players in 2016 as they diversified overseas. But with the government’s increased scrutiny on outbound capital, the domestic investment trend is likely to sustain throughout 2017,” adds Mr Huang. Mixed picture for inbound and outbound capital flows
Inbound investment to Singapore surged 441 per cent year-on-year in 2016 on the back of mega deals such as the JLL-brokered Qatar Investment Authority purchase of Asia Square Tower 1 for US$2.45 billion. The city-state, however, experienced a decrease in domestic real estate investment with a 16 per cent dip in 2016.
“Domestic investors were quiet as they focused on diversifying exposure overseas. S-REITs were also less active as they have already completed many transactions in recent years,” says Tay Huey Ying, Head of Research, Singapore at JLL.
“Foreign investors’ appetite remained robust as the price gap between buyers and sellers in Singapore has narrowed following recent price corrections, and many seized opportunities to purchase assets in the office sector at lower prices. Investors continue to be keen on Singapore’s prime office and sub-urban retail assets, which are closely held and rare to access,” adds Ms Tay.
Like Singapore, South Korea’s inbound investment swelled in 2016 with a number of major deals, including China Investment Corporation (CIC) and Brookfield Asset Management’s acquisition of IFC Seoul from AIG Global Real Estate for US$2.3 billion. The country registered a 282 per cent increase in domestic real estate investment year-on-year, driven by yields looking attractive on a global and regional basis, in addition to the domestic base rate at a record low level of 1.25 per cent.
South Korea’s investment in overseas property decreased by 21 per cent in 2016, partly due to 2015 being a record year for Korean outbound transactions, and a shift in focus to offshore debt deals with investors preferring those over higher-priced offshore equity deals.
In Hong Kong, real estate investment activity remains robust with an 18 per cent year-on-year increase in domestic transaction volumes in 2016, driven by local investors and corporate end users investing in Grade-A offices and strata retail units.
For more information on Asia Pacific Capital Flows, download the report here.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.1 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit http://www.jll.com/.
JLL has over 50 years of experience in Asia Pacific, with 36,000 employees operating in 94 offices in 16 countries across the region. The firm won the ‘World’s Best’ and ‘Best in Asia Pacific’ International Property Consultancy at the International Property Awards in 2016 and was named number one real estate investment advisory firm in Asia Pacific for the sixth consecutive year by Real Capital Analytics. www.ap.jll.com.