In Focus
COMMERCIAL PROPERTY | Staff Reporter, Hong Kong

APAC institutional investors to inject US$240 billion into world property markets by 2020

This constitutes a majority of their investments.

A special report has noted that Asia Pacific institutional investors, including those from Hong Kong and Mainland China, are expected to pump an additional US$240 billion into the world property markets by 2020.

According to a release from CBRE, the total allocation of APAC investors into global real estate is expected to reach US$500 billion—nearly double the US$260 billion invested as of end-2014.

Ada Choi, Senior Director, CBRE Research Asia Pacific, said, “five of the top ten global sovereign wealth and pension funds are from Asia Pacific, including the Exchange Fund in Hong Kong (7th largest) and SAFE from China (6th largest). A number of these institutions have announced plans to further increase their allocations to property investments.”

Here’s more from CBRE:

In March 2015, the Hong Kong Government announced plans to establish the Hong Kong Future Fund to invest in high return assets, with 50% of the fund allocated to alternative investments such as real estate.

Choi expects that this will prompt other APAC institutions to APAC institutions—which include sovereign wealth funds (SWFs), pension funds and insurance companies—are cash-rich, currently sitting on a combined war chest of nearly US$15 trillion as allocated to equities and bonds, but there is an increasing need for diversification into other, representing around 25% of total global AUM.

Capital has traditionally been “We estimate Asian institutional investors today have real estate allocations of around 2%—which is more than it was three years ago—but still considerably below their own internal targets and much less than their OECD peers which sit at 5-7%,” Choi added.

“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.”

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