INVESTORS OFFLOAD FOREIGN ASSETS

Asian outbound commercial real estate investment fell 25 percent to US$19 billion in the first half of 2019, weighed down by the rebalancing of portfolios by Chinese investors as well as global economic uncertainties, the world’s leading property consultancy CBRE has reported.

Purchasing by Chinese mainland buyers, who have shifted to net sellers since the second half of 2018, continued to weaken, with just US$1.4 billion worth of transactions completed during the six-month period.

That was less than a third of what was registered a year earlier and the lowest half yearly total for several years, according to CBRE data. Between January and June, Chinese mainland investors, mainly conglomerates and insurance companies, continued to offload assets in key overseas markets including London, New York and Vancouver — albeit at significant profit.

This, along with existing capital controls, is likely to perpetuate the trend of net disposing by Chinese mainland investors.

Hong Kong-based capital, meanwhile, declined for the fourth consecutive half yearly period to US$2.6 billion in the first six months of this year, though demand for prime assets in Sydney, Melbourne and London continued to be strong, CBRE analysis showed.

“Purchasing will be led by a limited group of investors including sovereign wealth funds such as China Investment Corporation and the State Administration of Foreign Exchange, and corporates acquiring assets for self-use, particularly in markets participating in the Belt and Road Initiative,” noted Alan Li, president of CBRE China.

“Overseas-listed companies whose primary business is real estate, such as Chinese mainland developers listed in Hong Kong, will also be active in investing capital overseas. Their focus has recently shifted toward smaller stabilized assets and commercial development opportunities with their partners.”