MARKETS & INVESTING | Staff Reporter, Singapore

Singaporeans grew portfolios in Europe with US$3.4b investment in H1

This led Singapore to be the most active in Asia for outbound investment.

For the first half of 2018, Singapore accounted for 36% of Asia’s total outbound investment of US$25.3m, leading th activity in the region, CBRE revealed.

According to a report, London continued to be a preferred destination for Asian investors, accounting for 26% of the region’s total outflows. “Substantial funds flowed from both Hong Kong and Singapore into London to capitalize on the more favourable yields and longer rental periods presented by commercial properties that are unattainable domestically,” it said.

Europe was a favoured location for portfolio diversification as US$3.4b went into the region for the first half of 2018, said Yvonna Siew, executive director of global capital markets, Asia Pacific at CBRE. “Singaporean investors were also active in the US logistics sector, building a portfolio to the tune of US$2.27b during the period,” she added.

“Many of our clients in Singapore continue to look for opportunities in the region and beyond, particularly in the office and logistics sectors. For many of them, this is a long-term growth strategy as they seek to diversify their portfolios and enhance their yields given limited opportunities and compressed yields in the domestic market,” Siew said.

Intra-Asian capital flows accounted for nearly a third of global outbound investments made by Asian capital at US$8.5b, said Tom Moffat, head of capital markets, Asia at CBRE. “The biggest beneficiaries of these capital flows were Hong Kong, China and Japan, but we expect several high-profile transactions in Singapore in the second half of the year,” he added.

Despite the deceleration in Chinese outbound activity, CBRE expects that Asian investors will continue to be active abroad. “Asia Pacific investors are becoming increasingly recognized players and continue to expand portfolios strategically. The slowing of Chinese investment has prompted the emergence of more diverse capital sources, which illustrates the depth of liquidity and appetite for offshore deployment,” Moffat said.

In the first half of 2018, Chinese investors decelerated acquisition of overseas assets and began disposals, particularly in the US and Europe, to improve balance sheets and to lock in profit for their early investment. “Disposals are expected to continue with some Chinese investors under finance strain looking to strengthen their balance sheet,” CBRE added.

Property companies were the most active investor class and accounted for half of the total Asian outbound investment, compared to 27% in the first half of 2017. REITs also accelerated outbound investment with two Singaporean REITs making their maiden investments in Europe.

Meanwhile, institutional investors, who accounted for 45% of the region’s total outbound activity in the first half of 2017, were less active this year and comprised 13% of the total. 

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