Chinese institutional investors' outbound investment in real estate will continue to increase next year as buying opportunities emerge in the United States and Europe and international financial institutions dispose of their property assets.
"I would expect outbound investment next year to rise [in value] again over this year. We will also see a large number of deals," said Alison Simpson, a partner at KPMG who advises infrastructure and property investors.
Money flowing out of China into overseas real estate last year maintained the uptrend seen in past years. It rose 33 per cent to US$4 billion last year, according to Jones Lang LaSalle.
The real estate services firm estimates Chinese investment in commercial real estate globally would increase a further 25 per cent to US$5 billion by the end of this year.
One of the biggest deals in this segment this year was the £260 million (HK$3.22 billion) purchase of the Lloyd's of London Building in Britain by Ping An Insurance in July. It was the first direct overseas property acquisition by a mainland insurance company.
"[Next year] we will see an increase in large deals but we will also see more smaller transactions," said Simpson.
"More and more state-owned enterprises from different sectors are looking to invest some of their capital overseas. One way of doing it is through looking into safe assets in the real estate sector."
The economic environment in the US and Europe presented interesting investment opportunities, she said.
"In addition, there might be opportunities in the secondary market, for example, from those financial institutions that had built up real estate assets themselves before the global financial crisis and still carry these on their balance sheets," Simpson said.
"The valuation of these assets fluctuates every year and some financial institutions have found that [affects] their results. I expect to see them divest their [real estate] businesses."
In terms of investment channels, Simpson said she believed it would be either through listed companies with real estate components such as a firm with a property development or management arm, or unlisted funds, or through direct investment in real estate assets.