Login
iscover
Investors from across the Asia Pacific have increasingly looked beyond their country’s confines, bringing cross-border investment to a six-year high in 2023.
According to data from MSCI, the share of regional cross-border investment within the Asia-Pacific region climbed to 18 per cent in the third quarter of 2023 – the highest level since 2018.
Investors from mainland China were a large part of this uptick in activity, dominating the commercial real estate market to account for 96 per cent of total quarterly investment volume – an all time high.
Capital from Asia was the dominant force in the region in 2023, as Cushman and Wakefield’s sector specialists discussed at the MIPIM Asia Summit held in Hong Kong earlier in December.
Cushman and Wakefield’s head of capital markets, Asia Pacific, Gordon Marsden, shared some insight during the event into how shifts in broader economic factors had allowed APAC investors more opportunities to invest in nearby neighbours.
“While global investors from outside the Asia-Pacific region and managers managing global capital are generally well-placed with significant dry powder for deployment, they have recently moderated their pace of investment and become more selective in markets and sectors. This has provided a window of opportunity for Asia-based investors to expand their regional footprint,” Mr Marsden explained.
He also discussed how local settings had driven strategy shifts among those within the region as well.
“While Singapore and Hong Kong capital remained the largest sources of intra-regional investment, we have seen a significant increase in Japanese outbound investment in Asia Pacific – reaching a record high this year to become the third largest source of capital within Asia. Japan’s low-rate environment has encouraged the country’s investors to seek opportunities with higher yield returns elsewhere in the region,” Mr Marsden shared.
Per MSCI’s data, Japanese outbound investment reached US$2.8 billion for the year-to-date as of November 2023, more than triple the previous 10-year average of $0.8 billion.
But even as Japanese investors have looked further afield for investment opportunities, that doesn’t mean the country’s potential has been neglected by its nationals. Domestic investment activity levels remained steady in the third quarter of 2023, accounting for 73 per cent of the period’s total transaction volume.
According to Francis Li, Cushman and Wakefield’s international director and head of capital markets for greater China, a similar trend was seen in his region of specialisation.
“We have observed a similar trend in mainland China this year, with domestic capital dominating the China CRE investment market, accounting for 87 per cent of the total transaction volume over the first three quarters, and an all-time high of 96 per cent in the third quarter,” he said.
Mr Li shared that during 2023, the firm had seen a growing number of domestic investors increase their allocation in commercial real estate assets, especially in Tier 1 cities, seeking stable long-term returns.
“We expect this trend to continue in 2024 given the relatively low-rate environment for domestic capital and recent expansion of C-REITs to include retail properties, in addition to industrial, logistics and R&D assets,” he said.
Mr Marsden agreed that the Asia-Pacific region was expected to continue to provide fertile ground for cross-border investment during the next 12 months.
“We believe in the long-term advantages that Asia Pacific offers to global investors, in terms of both strong economic and demographic fundamentals, as well as the diversification of investment products ranging from development projects in growth markets to core assets in mature markets. This will stimulate more activity as we move through 2024 as rates stabilise and asset prices normalise,” he said.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
Never miss a beat with 
Stay across what’s happening in the Australian commercial property market by signing up to receive industry-specific news and policy alerts, agency updates, and insights from reb.
Subscribe to reb Commercial:
Newsletter
