singapore
Singapore was the top country for outbound Asian commercial real estate investment. Image – Canva.
  • Outbound capital from Asia surged 69% year-on-year in 2021
  • Untied States the number one market, now followed by Australia
  • Singapore the top Asian country by outbound investment

While 2020 was a muted year for outbound capital to commercial real estate from Asia, this level surged by 69% year-on-year in 2021 to US$54.6 billion (AU$73.7 billion), according to a CBRE report.

This surpassed the pre-pandemic investment volume recorded in 2019.

United States was the top source of investment, however, Australia has moved up from three ranks – from fifth place – to become the second-highest source of outbound commercial real estate investment from Asia. Mainland China, the UK and Japan follow Australia.

This data isn’t surprising, given the Foreign Investment Board’s annual report revealed that commercial real estate investment into Australia by foreign investors almost doubled last year.

CBRE’s report noted that while European gateway cities such as London and Paris saw inflow from Asian capital in 2019, the UK was the only European market that recorded a significant inflow in 2021.

It appears Asian investors have shifted their focus back to the Asia Pacific region, perhaps due to their stronger networks and local expertise which can help when evaluating and executing investments.

Top five destinations for Asian outbound investment in 2021

top 5 capital sources
Source: CBRE, RCA

Sameer Chopra, CBRE Head of Pacific Research, said their January 2022 Investor Intentions Survey had indicated that Australia would retain its attractiveness among investors, with Sydney, in particular, remaining a top 4 preferred destination for cross-border real estate investment.

“The current geo-political situation, resilient cashflows of Australian assets and current exchange rate levels provide a good backdrop,” said Mr Chopra.

“Australia has benefitted as investors seek out markets that provide growth, scale and a stable business environment,” added Mark Coster, CBRE Pacific Head of Capital Markets.

“We have seen increasing interest across all asset classes, particularly office, industrial and retail, as well as strong enquiry from groups looking to invest in real estate debt.”

Little Red Dot making a big impact

Asian outbound investment by source of capital (2017-2021)

asian outbound source
Source: CBRE, RCA

Globally, Singapore capital dominated outbound investment from Asia, with the city-state making six out of the top 10 largest outbound transactions involving institutional capital and developer funds.

Investors from Singapore deployed $32 billion abroad, a year-on-year increase of 164%.

With e-commerce booming and supply chain constraints, interest in logistics grew with Asian investors pouring US$24 billion (AU$32.4 billion) into this sector.

This meant logistics investments surpassed office investments for the first time, resulting in compressing global industrial yields, which fell to 3.7% during Q4 2021.

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