Insurers are one of the largest CRE investors in China – Cushman & Wakefield

The share of regional cross-border investment within Asia Pacific reached a 6-year high at 18% in Q3’23.

The domestic capital dominated the commercial real estate (CRE) investment market, accounting for 87% of the total transaction volume in the first three quarters and reaching an all-time high of 96% in the third quarter in mainland China. Large institutional investors such as insurance companies, onshore PEREs, and banks and trusts’ investment arms; government platforms and SOEs; and end-user buyers particularly from the energy, finance and TMT sectors.

Capital originating from Asia continued to dominate the commercial real estate (CRE) investment market in the Asia Pacific region this year, as highlighted by subject matter experts from Cushman & Wakefield at the MIPIM Asia Summit.

Francis Li, International Director and Head of Capital Markets, Greater China at Cushman & Wakefield, expects the trend of increased allocation in commercial real estate assets, particularly in Tier 1 cities, to continue in 2024, driven by the relatively low-rate environment for domestic capital and the expansion of Commercial Real Estate Investment Trusts (C-REITs) to include retail properties alongside industrial, logistics, and R&D assets.

Inbound Investment that global investors from outside the Asia Pacific region, as well as managers overseeing global capital, have become more discerning in their investment approach, providing an opportunity for Asia-based investors to expand their regional presence, noted Gordon Marsden, Head of Capital Markets, Asia Pacific (APAC) at Cushman & Wakefield.

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Whilst Singapore and Hong Kong remained the primary sources of intra-regional investment, there has been a notable surge in Japanese outbound investment in APAC, reaching a record high this year and ranking as the third-largest source of capital within the region. Japan's low-rate environment has prompted its investors to seek higher yield opportunities in the region.

According to the latest data from MSCI, the share of regional cross-border investment within APAC reached a six-year high at 18% in Q3 2023. 

This increase was mainly driven by a substantial rise in Japanese outbound investment, surpassing the previous 10-year average threefold. Conversely, domestic investment activity remained relatively steady, comprising 73% of the quarter's total transaction volume.

Marsden emphasised the long-term appeal of APAC for global investors, citing strong economic and demographic fundamentals and a diverse range of investment products, from development projects in growth markets to core assets in mature markets. 

He anticipates increased activity in 2024 as interest rates stabilise and asset prices normalise.