Europe and Asia Pacific ranked as top investment destinations in 2020

By Timothy Tay

/ EdgeProp Singapore |

January 17, 2020 4:00 PM SGT

SINGAPORE (EDGEPROP) - The lion’s share, or 45%, of total real estate investment capital deployed this year is expected to find its way to Europe, according to a published survey. The Asia Pacific region is likely to attract 31.9% of capital this year, significantly increasing from 19.6% in 2019.

The survey was done by three real estate associations – the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV), the European Association for Investors in Non-Listed Real Estate Vehicles (INREV), and the Pension Real Estate Association (PREA). The survey results this year are based on data from 140 respondents.

Infographic: ANREV

Overall, respondents indicated plans to deploy about US$101.3 billion ($136.3 billion) into real estate globally. Of this, 19.5% will come from Asia Pacific-based investors, and 19.4% from North American investors. But the bulk, or 61.2%, will originate from investors in Europe.

In addition, the survey found that institutional investors have signalled a greater appetite for risk this year, and they continue to target value-added investments in Asia Pacific. This also reflects investors’ ongoing search for alternative ways to deploy capital and drive returns, in the face of continued low interest rates and low yields.

Real estate on average represents 10.4% of surveyed institutional investors’ portfolios, and this allocation is expected to increase this year, to a targeted allocation of about 11.4%. More than 63% of surveyed institutional investors expect their allocation for real estate to increase over the next two years.

Chart: ANREV

Sydney and Melbourne retained their pole and runner-up positions as investment destinations, while Tokyo came in third place. Singapore fell from sixth place last year to seventh this year, as did Seoul which fell from fifth place to eighth.

More than 62.5% of surveyed Asian investors indicated Sydney as their preferred destination, followed by 58.3% who named Melbourne. Europeans and North Americans also rate Sydney highly, with 75% and 60% of the respective investors ranking it as their preference.

By sector, office property was the most preferred among the investors, with 90.2% of them ranking it as their top sector. It was followed by industrial/logistics with 73.2%, and residential at 53.7%. Investment demand for retail assets decreased among institutional investors, with less than one-third willing to commit capital to the sector, compared to two-thirds in last year’s survey.