18 Per Cent Rise in Cross Border Investment Boosts Property Sector
Cross border investment accounted for 46 per cent of Q3 total investment Colliers’ Capital Flows Quarterly reveals Asian investment rising and moving up risk curve
LONDON, October 06, 2014 – Cross border investment amounts to €61 billion year-to-date, an increase of 18 per cent on last year. Quarter three’s total investment turnover reached €34.5 billion, €16 billon (46 per cent) was cross border capital, of which Asian investors contributed €2.7 billion as they move up the risk curve in search of higher yields.
Total investment year-to-date stands at €128 billion, up five per cent on the same period last year.
According to Colliers’ Capital Flows Quarterly Report, low yields from Central London’s Core, and a better understanding of the market, has encouraged Chinese, Taiwanese, Japanese and South Korean investors to look for better yields on the continent. Richard Divall, Head of Cross Border Capital Markets, Colliers International said: “Asian capital is becoming increasingly active across continental Europe, particularly in Germany, where South Korean, Chinese, and more recently, Singapore investors have completed high-profile transactions.
“In the UK, Asian investors are moving up the risk curve, away from archetypal office stock, investing in value add opportunities and considering different asset classes, with shopping centres, development and hotels at the forefront of this diversification. Back in 2012, 71 per cent of Asian investment in Europe was in offices, this has fallen by 10 per cent as investors look for higher returns in other property sectors. As a result, the share of hotels in Asian investment has increased from eight per cent in 2012 to 13 per cent in the first half of 2014, and now makes up 25 per cent (€597 million) of all hotel investments.”
Since resolving regulatory issues, Taiwanese insurance companies have entered Europe through the City of London; Cathay Life, Taiwan’s largest insurance company, paid around €390 million for Woolgate Exchange in the city of London, reflecting a 5.3 per cent yield. Prime office yields in Taipei are around two per cent, the yields generated by Tier 1 cities in Europe are therefore becoming increasingly interesting to these investors.
“We have seen the resurgence of Swiss cross border investment, as it surpassed €1.3 billion during the first nine months of the year, up ten per cent on the same period last year. An example of the surge of Swiss capital is Partners Group’s purchase of a real estate portfolio of retail and office properties in Finland and Sweden, for approximately €300 million.
“Going into Q4, the size and interest in single assets/portfolios currently being marketed leads us to anticipate high levels of activity in the coming months” concluded Divall.