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APAC institutions set to invest USD500bn in global real estate by 2020

Asia Pacific institutions are expected to inject USD240 billion into global property markets in the next five years, according to a special report from CBRE. This is in addition to the USD260 billion that was already spent pre-2015, putting the five-year total at USD500 billion.

The APAC institutions responsible for these huge investments are primarily sovereign wealth funds, pension funds and insurance companies, which have categorised as ‘early adopters’ and ‘new entrants’.

CBRE characterises early adopters as the sovereign wealth and pension funds who began investing in real estate before the global financial crisis so are already armed with significant portfolios and experience. New entrants in APAC are generally Chinese and Taiwanese insurance funds who have made maiden purchases only recently and tend to opt for trophy assets in major gateway cities.

“We are seeing the expansion of the investment landscape,” said Marc Giuffrida, executive director of CBRE Global Capital Markets. “The new wave of investors have quickly learnt from their established peers and are becoming more dynamic in their approach – they are recruiting top talent at both market- and decision-making level, and increasing their in-country presence via new offices, joint ventures, or partnerships.

“The recent spate of deals announced shows these investors can now move beyond headline-catching trophies and into other asset classes and strategies.”

 

 

APAC investors are decidedly cash-rich with estimates that the area is sat on a war chest of around USD15 trillion. The first six months of 2015 saw USD10 billion invested in global commercial property and the figure is expected to rise by year-end.

 “A number of Asia Pacific institutions have also announced plans to further increase their allocations to property investments, which we expect is going to set the example for other institutions and attract them to similarly invest in real estate,” observed Ada Choi, senior director of CBRE Research Asia Pacific.

Regardless, APAC property investment portfolios are still considered underweight and a way off hitting internal targets. As such, investment plans are expected to accelerate throughout the region in order to close this allocation gap.