Asian institutional funds to channel US$240 billion into world’s property market by 2020, CBRE says

Asia Pacific institutional investors, including those from Hong Kong and mainland China, are expected to pump US$240 billion into global property by 2020, according to a survey by CBRE.

About US$260 billion has already been allocated by regional investors into the global property market.

Asia Pacific institutions, which include sovereign wealth funds, pension funds and insurance companies are sitting on a combined war chest of nearly US$15 trillion as of the start of 2015, according to CBRE.

Traditionally, pension funds and other institutional investors have channelled funds into corporate and government bonds, among other investments, although a need for greater diversification is behind the drive for global real estate, CBRE said.

“We estimate Asian institutional investors today have real estate allocations of around 2 per cent, which is more than it was three years ago, but still considerably below their own internal targets and much less than peers in The Organisation for Economic Co-operation and Development countries which sit at 5-7 per cent,” said Ada Choi, senior director, CBRE Research Asia Pacific.

“This allocation gap, combined with real estate’s attractive risk-adjusted returns, is why we are seeing an acceleration of investment plans by institutional investors not just globally but regionally as well,” she said.

Hong Kong and mainland China will be major investors.