ING Real Estate Finance expects Asian outbound property investment to increase on euro weakness

ING Real Estate Finance, part of ING Commercial Banking, expects Asian outbound property investment to increase this year, with a weak euro fuelling Chinese demand for European assets.

The euro has lost more than 20 per cent against the US dollar in the past year, offering greater buying opportunities in Europe for investors in Hong Kong, where the currency is pegged to the greenback, and in China, where the yuan is more loosely tied to the US dollar.

Europe is already an attractive investment destination among Asian investors, and Robert Scholten, head of ING Real Estate Finance Asia-Pacific, said the growing number of Asian investors buying overseas real estate was also driven by diversification and higher yields.

Property consultant CBRE says office yields in Europe range from 3.8 per cent a year in London to 5.8 per cent in Milan.

"It will continue to be a trend," he said.

According to Colliers International, outbound investment flows into property from Asia last year surged 38 per cent year on year to a record US$46 billion.

ING Real Estate Finance is a commercial real estate financier with a pan-European and Asian platform.

It has a team of 275 staff in eight countries in Europe including the Netherlands, Britain, Spain, France and Germany with a loan book estimated at €25 billion (HK$210.7 billion).

Asides from a push for diversification and higher yields, Scholten said more Asian non-banking institutions such as insurance firms were looking at Europe because of regulatory changes.

In 2013, the China Insurance Regulatory Commission issued new regulations that allowed insurance companies to invest a maximum of 15 per cent of their total assets in non-self-use real estate, domestically or overseas.

Scholten said the changes had been the catalyst for a new wave of capital.

John Boyles, global head of ING Real Estate Finance, said there were twice as many transactions in some European countries last year than in 2013.

"There's very high interest by Asian investors in the European Union," he said.

Scholten said hospitality was one new focus. "We see a lot of large corporate insurers buying hotels or hotel chains in Europe and in the United States," he said.

Jan-Evert Post, of the global management team at ING Real Estate Finance, said the logistics sector was becoming popular. "Logistics was probably not an asset class five to seven years ago but has become one on the back of fast growing e-commerce."

In C-Suite on P3, Scholten discusses how ING plans to develop its business in the Asian property financing market