Asian investors continued to assert their spending power in 2019, recording US$45 billion ($64 billion) in outbound real estate investment. Korean buyers signalled their growing prominence in the global arena, increasing their total investment by 66% year-over-year. Japanese investors also stepped up their activity, while Thailand emerged as a new source of outbound capital.
Singaporean investors remained very active in 2019, accounting for US$15 billion in outbound real estate investment (CBRE/Getty)
Investors across the region cast a wider net than in previous years, completing acquisitions in a larger number of gateway cities. Paris was crowned as the top destination for Asian capital, attracting US$4.9 billion worth of deals — though cities like Dublin, Vienna and Milan also sparked keen interest.
Closer to home, Singaporean and Malaysian investors continued to display a strong appetite for overseas property, as evidenced by two key trends shaping the cross-border investment landscape.
In the past quarter, we have seen Malaysian investors deploying significant capital into the London office market. In a transaction fronted by CBRE Global Investors and advised by CBRE, a Malaysian pension fund acquired Premier Place in the City of London for approximately US$414 million. Around the same time, it was reported that KWAP had acquired 100 Cheapside for an estimated US$180 million. Both funds already hold a number of UK real estate assets across multiple sectors.
These big-ticket transactions indicate Malaysian investors’ renewed interest in London’s office market, which we expect will continue in 2020.
Singaporean investors remained very active in 2019, accounting for US$15 billion in outbound real estate investment. Although they traditionally tend to favour office or logistics assets, a growing number of investors are now shifting their focus towards alternative sectors like student housing.
Towards the end of 2019, Singaporean buyers injected a hefty amount of capital into the UK student housing market. For instance, CBRE, acting on behalf of Unite Students, sold just under US$130 million of the Seed Portfolio to Mapletree — a best-in-class student housing offering with 100% occupancy. Further cementing this trend, Singapore Press Holdings acquired a US$580 million student housing portfolio in 2H2019, bringing the total number of student beds they own across the UK and Germany to over 7,500.
UK student housing is attracting strong investor interest for a number of reasons. Firstly, it is a defensive asset class that can weather economic turbulence, since student numbers are rarely affected during downturns. As one of the most popular destinations for international students in the world, the UK market is undoubtedly appealing to investors. Secondly, it is more established compared to other alternative sectors such as multi-family, meaning that there is more income-generating stock available.
This emerging trend speaks to the fact that Singaporean investors are increasingly pursuing portfolio diversification opportunities overseas. It will be interesting to observe whether they solidify their interest in the student housing market this year, or if they choose to turn their attention to other asset classes.
Despite the current global economic volatility, we anticipate that investors from Malaysia and Singapore will continue to be active players in the outbound investment landscape in 2020.
Chris Pilgrim is the senior director of global capital markets, CBRE
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