The View | Why Asian capital is chasing real estate assets in the US and UK

For an indication of the strength of Asian investors’ appetite for American and European commercial real estate, look no further than the latest string of deals completed by Mapletree Investments, the property arm of Temasek, Singapore’s state investment fund.

Since the end of August, Mapletree has acquired four purpose-built student accommodation assets in several regional cities in England, closed its first US office fund and bought two portfolios of logistics properties across major cities in America.

Since the eruption of the Covid-19 pandemic, the Asia-Pacific region’s own commercial property markets have continued to attract significant investment, initially because of the appeal of a region that handled the crisis more effectively than Western economies, but mainly because of global investors’ need to allocate more capital to Asian real estate.

Investors have been drawn to the vast growth potential of Asia’s emerging markets, the relative safety and transparency of the region’s advanced economies and the opportunity to deploy capital in increasingly popular alternative sectors, particularly data centres. Transaction volumes in the region rose 39 per cent year on year in the first half of 2021, just 6 per cent shy of 2019 levels, data from JLL shows.

However, less attention has been paid to the equally strong recovery in Asian outbound property investment, which increased 36 per cent year on year in the first half of 2021, to US$15.5 billion, data from CBRE shows.

The bulk of the capital, moreover, was deployed outside Asia. The United States and Britain were the first and third most popular destinations respectively for Asian cross-border investment, with Singaporean buyers alone accounting for two-thirds of Asian deals overseas, according to CBRE.