Singapore outpaces China, as Asian investment soars

Photo: Fifth World Art

Singapore is outpacing China in the global property race, according to new figures. Data from CBRE shows that investment by the city-state overseas jumped 58 per cent in 2015 compared to 2014, with $19.3 billion spent on property – just ahead of China’s $17.6 billion, up 31 per cent from the £12.5 billion invested in 2014.

Hong Kong also rose at a faster rate than China, with its investment climbing 49 per cent, albeit to a smaller total of $10 billion. (South Korea splashed $7 billion on real estate in 2015, double the $3.5 billion recorded in 2014.)

The figures from CBRE include deals for office, retail, industrial, hotel, residential and other properties, but conflict slightly with similar data from Knight Frank. The estate agency’s latest research shows that Chinese outbound real estate investment climbed to almost $30 billion in 2015, double that of 2014 – a figure that would place it far above CBRE’s figure for Singapore.

While the two reports may measure and track investments differently, though, they both confirm that China remains a major force in global real estate, as do its neighbouring markets. Indeed, Asian outbound investment overall surged to a new high of $62.4 billion, according to CBRE, up 37 per cent year-on-year.

Both reports also highlight the Americas as the most sought-after market for investors in the continent, with CBRE’s data suggesting investment there doubled to $22.4 billion in 2015 compared to 2014 (followed by EMEA – $17.6 billion – and the Pacific – up 45 per cent to $8.1 billion).

“[The] US is the fastest growing mature market for Chinese investment,” agrees Knight Frank, which found that the over half (52.3 per cent) of this capital was targeted at hotel and office properties in Manhattan.

“Unlike UK and Australia where transactions are focused in gateways, investment in the US is more geographically diversified,” explains Knight Frank. “We have seen the so-called “Fourth Wave” investors (a new, mixed group following the first three waves of institutional investors, developers and insurers) investing in primary and secondary US cities on a range of small- to mid-cap commercial properties.”

Nonetheless, big portfolio deals remain popular, with transaction volume involving deals sized over $500 million up 167 per per cent. Knight Frank highlights developers as particularly keen to invest in the USA, as it helps them to diversify away from the local property market, while insurers also closed several mega-deals last year, including the purchase of New York’s Waldorf Astoria Hotel in New York.

The reports arrive at a time when China’s domestic economy is surrounded by growing uncertainty. Outbound capital, though, is only forecast to keep on flowing into overseas property. In the first 10 months of 2015, the total volume of Chinese outbound real estate investment had already exceeded that of the entire previous year, according to Knight Frank.

“This is not just the result of the government’s various capital liberalisation initiatives, such as the Qualified Domestic Institutional Investor (QDII) schemes, but also, perhaps more importantly, an outcome of China’s long-term national strategy both to project its trade and investment prowess globally and to ensure financial stability,” comments David Ji, Knight Frank’s Head of Research, Greater China.

“Even with country’s efforts to boost domestic consumption, especially in the housing market, we are not seeing a drastic retreat but dramatic increase of Chinese capital globally.”

“In the US, despite this being a presidential election year, and with ongoing political and trade friction, the sheer size of the US market and volume potential will be a major draw to Chinese investors going forward,” he adds.