Asia Pacific real estate investors return to Europe

The vaccine rollout and easing of border restrictions have boosted confidence among Asia Pacific real estate investors who have started increasing their exposure in Europe in search of buying opportunities, says Savills.

Data from Real Capital Analytics cited by Savills shows a 71 percent increase in second quarter investment deals completed by Asia Pacific investors in Europe reaching 2.6 billion euros.

“Most (60 per cent) of the money has been placed in the UK; sector-wise, European logistics claimed half of the Asian capital invested, followed by offices (23 per cent). There has also been a tripling of investment into residential,” says Savills.

Singaporean investors are behind much of this spending. They continued to deploy capital during the pandemic while others didn’t, but aided by well-established local platforms around European markets, they are now putting more energy into their European activities. In the second quarter of last year, 73 million euros was placed by Singaporean groups but by the second quarter of this year, this amount had grown to 1.26 billion euros.

We expect this to continue, either through a team based in their target market, re-upping positions with existing fund managers, or looking at more programmatic joint ventures, adds the global consultant.

Singaporean-based REITs are seen being especially influential in Europe. In only a decade, the market capitalisation of the Singapore-based REIT sector has grown from $30 billion to $100 billion. With this success comes the pressure to diversify, and increase stability of cash flows. For this reason, Europe will remain attractive to them.

“Portfolios of scale in the purpose built student accommodation, data centres and logistics sectors, will all be of interest,” highlights Savills.

“By this time next year, we predict that South Korean firms will also be a headline story in Europe, should the world continue to recover from Covid-19. We are seeing growing evidence of South Korean investors bidding across markets again, albeit not quite to the same extent as before the pandemic,” it adds.