CBRE’s analysis of results for Q2 found that cross-border investment turnover surged by 109% quarter-on-quarter to US$7.7 billion; the largest such total recorded since the global financial crisis. Overall investment activity strengthened slightly up 13% quarter-on-quarter to US$25 billion, coming off the back of several major deals closing.
Other key highlights for Q2 investment include:
Australia and Japan accounted for nearly half of regional turnover as investors continued to chase core assets in mature markets. Total transaction volumes stood at US$5.6 billion for Australia and US$5.5 billion for Japan. The intense competition is forcing many investors to look for secondary assets in Australia and regional markets in Japan. Hong Kong, Singapore and South Korea also saw a significant increase in activity this quarter.
Yield levels in many Asian markets remain low. This is prompting investors to be more cautious on entry prices. Investors are becoming more patient when looking for acquisitions and this is lengthening the investment decision process.
The limited availability of investable core assets means investors are broadening their focus to other mature markets such as South Korea and New Zealand, as well as the logistics sector.
Investor sentiment in China weakened due to the tight lending market concern over further defaults in the shadow banking market and slower housing sales. Meanwhile, investor confidence in India improved following the election of a stable single party government.
CBRE’s Senior Director of CBRE Research, Ada Choi commented:
“The quarter-on-quarter surge in cross-border transactions indicates a release of some pent-up demand from international investors. Broadly, international investors remain underweight for Asia real estate and are hungry for assets. As market demand has softened they now have more time to approach and negotiate deals and this is resulting in greater cross-border activity. However, quarterly numbers are subject to fluctuations based on the size of transactions as well as busy and quiet periods in the market, and the scale of the second quarter increase is significantly impacted by several large transactions across the region, all above US$100 million in size.”
* These numbers are intended to provide a preliminary summary of key market trends before the publication of CBRE’s Capital Markets MarketView quarterly report. The information and numbers here are to be treated as indicative and subject to change.
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.