Singapore is punching above its weight when it comes to cross border real estate investment. The city-state took the lead as a major investor in global property markets, accounting for 36% of Asia-to-global capital flows in 2018, according to Colliers’ latest Investor Pulse report.

Citing data from RCA, Colliers noted that capital flows from Singapore to global property markets reached USD18.0 billion, up by 3% year-on-year (YOY) to account for 36% of the total (USD50.5 billion). In so doing, Singapore capital replaced China-based capital as the major Asian investor in global property markets (completed assets and land sites) last year.

In the second spot, China accounted for 23% of the total Asia-to-global property investments, while South Korea rounded up the top three Asian capital sources for global real estate in 2018, making up 15% of the total. 

Asian investors more cautious about global markets
Investment figures in 2018 suggest that Asian investors have become more cautious about international property investment due to moderating economic growth, uncertainty caused by US-China trade tension, and concern about prospects for the UK in the light of the impasse over Brexit. 

Overall, capital flows from Asia to global real estate markets came up to USD50.5 billion in 2018, down by 31% YOY and the lowest figure since 2014. 

The US remained the preferred global destination for Asian investors in 2018, making up 34% of the total Asia-to-global capital flows. However, activities of Asian investors in all the top global markets lost steam. Besides the 47% drop in the UK, Asian investors’ transaction volume fell 12% YOY in the US and 6% in Australia last year. 

Despite lower investment volumes in 2018, Colliers observes that Asian capital is beginning to spread more broadly, notably in Europe. Asia-based capital has started to expand into more European locations, not only the core German, UK and Paris markets but also into Amsterdam, Madrid, Lisbon, Helsinki and Warsaw. In 2018, Asia-based capital rose to account for 30% of all cross-border activity in Europe, and Colliers expects this proportion to rise further.

Robust cross-border capital flows within Asia
In contrast to the weaker Asia-to-global flows, intra-Asian capital flows strengthened further in 2018, rising 10% YOY to USD98.2 billion – maintaining the positive trend of recent years and amounting to nearly double Asia-to-global property flows. The growth in intra-Asian investment in 2018 largely reflected the acquisition of undeveloped land sites (USD82.5 billion, or 84% of the total), up by 25% from the previous year. 

Colliers expects intra-Asian property investment to continue strengthening, and it is predicting another 10% increase to USD108.0 billion in 2019


Sectors of interest among Asian investors
Asian investors in global markets focused on office and industrial assets. Investment in office and industrial property made up, respectively, 45% and 29% of total Asia-to-global investment of USD50.5 billion, according to the report.

While the office sector still dominates Asian investors’ activity by size, Colliers’ global research points to a rising focus on residential, logistics and hotel assets, as well as land development sites. It also suggests that investors domiciled in APAC and Europe are willing to invest in a more diverse range of assets than North American and Australian investors.

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