Cooling measures in Asia spur capital flows to the West

The property market cooling measures imposed in Singapore, Hong Kong and on the mainland over the past few years have encouraged an increasing number of Asian investors to shift their capital from East to West, fuelling strong growth in international real estate investment in Britain, France, the United States and Australia.

Data from property consultant JLL shows that Asian buyers represented less than 10 per cent of the Central London commercial investment market in 2010 but close to 30 per cent by the end of last year. While London, Paris, New York and Sydney are the most popular places for Asian investors, their choice of destinations has been expanding, with German cities such as Berlin, Frankfurt and Munich emerging as new targets.

Andrew Taylor, co-chief executive at Juwai.com a property portal that allows overseas real estate marketers to reach out to mainland buyers, said Chinese buyers were now primarily seeking good investments abroad. An increasing number of mainland buyers had approached Juwai to seek out investment opportunities in Germany.

One reason for the move is that Germany is the biggest economy in Europe, and as the impact of the euro crisis diminishes, the country's economy has started to improve.

Driven by robust domestic spending, the German economy grew faster in the first quarter of this year than at any stage in the past three years, expanding by 0.8 per cent, according to Germany's federal statistics office. Overall gross domestic product in the euro zone rose by 0.2 per cent.

Another reason is that the German property market has become more active. According to Colliers International, Germany's commercial investment market recorded excellent first-quarter results, with transaction volume of €10 billion (HK$106.3 billion), a 41 per cent year-on-year rise, thanks to increased interest from international investors and a significant increase in portfolio deals.

Data from JLL shows Asian investment in German real estate grew by an astonishing 916 per cent from 2011 to reach US$1.27 billion by the end of last year. Mainland investment in Germany went from nothing in 2011 to more than US$200 million last year and is expected to increase significantly again this year. The property consultant is arranging five to six deals that include potential investors from the mainland and other parts of Asia. With a yield of 4 per cent to 5 per cent, German property is a more attractive investment than in many cities in Asia.

However, for parents wanting to buy homes for their children to use while studying abroad, Germany still loses out to English-speaking countries such as Britain, the US and Australia.

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