The View | Singaporean real estate investors are leading the Asian charge deeper into Europe as Chinese firms lie low

While China’s capital controls have dampened outbound investment, Singaporean investment firms are venturing beyond London and Paris in Europe, with acquisitions of property assets in Poland and Hungary. South Korean investors are following suit

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Asian property investors are venturing deeper in Europe, targeting investments in cities such as Prague. Photo: Handout

Published: 9:00am, 23 Apr 2019Updated: 9:05am, 23 Apr 2019

Last Tuesday, the real estate arm of Singapore Press Holdings (SPH), one of Asia’s leading media companies, announced that it had acquired £134 million (US$174 million) worth of student housing assets in three cities in Britain – Southampton, Sheffield and Leeds – in a deal that increases the size of its United Kingdom university accommodation portfolio to more than 5,000 beds in 10 cities, making SPH one of the leading players in the popular asset class.

The transaction is the latest in a string of major cross-border acquisitions by Asian property investors who were the largest net exporters of capital globally last year, with nearly US$18 billion more in inter-regional purchases than sales, according to a report published by Jones Lang LaSalle (JLL), a real estate adviser, last month.

The dominance of Asia in outbound capital flows is remarkable in view of the sharp decline in investment by mainland Chinese companies – who as recently as 2017 were the largest cross-border purchasers of property globally – due to Beijing’s imposition of tighter capital controls. According to a separate report published last month by CBRE, another real estate adviser, mainland investors became net sellers of global property in the second half of last year, disposing of US$300 million of assets.

The plunge in Chinese outbound investment – down a whopping 84 per cent year-on-year last year to US$4.6 billion, compared with an average of nearly US$20 billion between 2014 and 2017 – was offset by a surge in foreign purchases by Singaporean investors, who acquired US$20.7 billion of global commercial real estate assets last year, an annual rise of 30 per cent, according to JLL. By country, Singapore was the leading source of cross-border investment in 2018. South Korean property investors also spent more abroad, while Hong Kong buyers retrenched, despite remaining one of the main sources of outbound investment.

While America’s commercial real estate market saw the biggest increase in overall transaction volumes, Europe was the main beneficiary of cross-border investment, pulling in more than US$80 billion of foreign capital last year, compared with US$44 billion in the Americas and US$15 billion across the Asia-Pacific region, JLL notes. Although global property funds – investors who raise capital from multiple regions, with less than 70 per cent of the funds coming from a particular country – were the most active buyers in Europe, Asian companies were the second-biggest group of investors, JLL’s data shows.

.css-1m2rp1p{color:#34b8b5;}The View | Singaporean real estate investors are leading the Asian charge deeper into Europe as Chinese firms lie low

The View | Singaporean real estate investors are leading the Asian charge deeper into Europe as Chinese firms lie low