New sources of Asian capital are emerging in Europe, with Korean and Japanese investors particularly active, according to new research from CBRE.
However, Chinese investment in Europe has cooled as capital controls over mainland China continue to have a significant impact, the Asia Pacific Viewpoint suggests.
In 2019, Asian outbound commercial real estate investment fell 17% y-o-y to US $45 bn (€40 bn), mainly due to lower Chinese volumes, although territories such as Korea displayed a markedly different trend.
Korean investors' full-year investment volume grew by 66% to US $12.5 bn, with nearly 70% of total Korean capital invested in European markets. According to CBRE, the shift emerged as buyers capitalised on low financing costs and the hedging premium between the Won and Euro.
Portfolio diversification stimulated investors from Korea, Hong Kong and Singapore to inject significant capital into Europe, of which US $4.9 bn of deals was recorded in Paris alone.
Dr. Henry Chin, head of research, APAC/EMEA, CBRE said: 'Investors from Hong Kong and Singapore are expected to continue paying close attention to European markets throughout 2020. The easing of geopolitical uncertainties post-Brexit are also expected to reignite investors’ interest in London in 2020.'
Investors from Asia also led a pronounced shift toward other European cities, including Dublin, Milan, Prague and Warsaw. In contrast, interest in London, which was the most popular destination for Asian outbound capital in 2018, weakened amid ongoing political uncertainty and limited availability of stock for sale.
'In 2020, we expect commercial real estate investors in Asia to continue seeking portfolio diversification opportunities outside of their domestic markets. As the upward market cycle reaches maturity, it is projected that investors in the region will turn to assets with stable income streams,' Chin added.