MARKETS & INVESTING | Staff Reporter, Hong Kong

Mainland investors pick Hong Kong as second most attractive market: CBRE

Hong Kong comes after US.

Chinese investors emerged as the most active Asian outbound real estate investors, with a 47% jump in investment proceeds to US$28.2 billion in 2016, according to latest data compiled by CBRE. Hong Kong ranked the second most preferred destination for mainland investors, trailing after the US.

The office sector remained the most-preferred asset class for Asian investors, accounting for half of overall investment - US$60.6 billion. London remained the most preferred destination for office acquisition while Hong Kong and New York replaced Shanghai and Sydney as the top three.

“Mainland Chinese end-users have been the primary drivers of office asset investments in Hong Kong. One of the top 10 Asian outbound deals of 2016 was China Everbright Bank’s acquisition of Dah Sing Financial Centre. The conglomerate paid more than US$1.2 billion for the building, which will be used for the expansion of the company’s operations in Hong Kong,” said Stanley Wong, Executive Director, Capital Markets, CBRE Hong Kong. ”With the establishment of the shared stock market platform between Hong Kong and the mainland, we will continue to see more mainland banks and financial companies expand their foothold in Hong Kong,”

“Despite the more stringent measures on outbound investment imposed by the Beijing government, Chinese investors remain active in deploying capital offshore into Hong Kong real estate asset,” Wong added.

Hong Kong’s outbound investment, however, decreased to US$8.4 billion last year from approximately US$10 billion in 2015.

For the second consecutive year, CBRE figures reveal that the US remained the most favored destination for Asian capital, drawing 43% of the overall total, followed by EMEA as the second-favored at 27%. Asia—with figures showing an increase of intra-regional activity this year—comprised 23% of overall investment turnover, up from 21% in 2015, which shows that Asian investors favored to keep more capital within their own region.

New York surpassed London as the top metropolitan destination for outbound investment in 2016, however, it contributed to a smaller share compared to 2015. The total top five destinations—New York, London, Hong Kong, Seoul and Sydney—contributed to 37% of the overall total, a decrease from 42% y-o-y, revealing that investment was spread across more diverse destinations.

“While China, Singapore, Hong Kong and South Korea are still the four major sources of outbound investment capital, we are seeing emerging activity from other markets, such as India. There was a significant uptick of Japanese investment targeted mostly for the US. We expect Japan to step-up overseas investment in the year ahead as they are coming off a low base,” said Robert Fong, Director of Research, CBRE Asia Pacific.

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