More Asian real estate capital to cross borders in 2016

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Globalization will remain a strategy for real estate developers, with Asia leading in terms of having the most global capital this year.

Property advisor Colliers International said in a report that most global real estate investors are likely to focus on their domestic markets this year.

This was based on a survey among 600 global real estate investors, of which 68 percent said they are planning to invest only in their macro-region in the next 12 months.

Colliers, however, noted that real estate capital has never been more mobile.


It reported that global cross border investments accounted for 40 percent of the total direct property investment volume in the first nine months of 2015 at $250 billion, higher than its 33-percent share in the previous year.

“While this trend is partly cyclical—investors tend to widen their horizons during boom times and retreat to their own markets during downturns—the property investment arena has also become st ructurally more global,” Colliers said.

Meanwhile, the survey also observed that capital from Asia, the Middle East, and the United States is the most global, as investors in these regions said they would invest outside their domestic region in the next 12 months.

Asian investors showed the most interest for investing overseas, as 41 percent of the respondents expressed the desire to invest outside the region. It is followed by the Middle East with 38 percent, and the US with 36 percent.

In contrast, the report noted that investors in Latin America, Australia, New Zealand, and UK are less likely to venture outside their regions.

Colliers said many of the expected cross-border investments would come in the form of joint ventures with local partners.

“The survey shows that to invest overseas, many will look to form joint ventures with local partners, with nearly a third of those investing in the Americas in the next 12 months and 21 percent of those looking at Europe, Middle East, and Africa (EMEA),” Colliers reported.

The report showed that only 14 percent of the supposed joint ventures are likely to happen in the Asia Pacific region.

But it also noted that Asia Pacific investors are also most likely to form partnerships as they invest outside their region this year.

“Thirty-three percent of Asian investors will look to partner to invest into the Americas in the next 12 months,” Colliers said. “Interestingly, the figure is halved for EMEA investment.”

Colliers said forming joint ventures with established local groups would help investors take advantage of their expertise and a potential development pipeline in their own market.

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