Asian insurance companies and pension funds, especially in Singapore, Malaysia, China and Korea, are showing increased interest for overseas homes, according to New York-based investment banking and commercial brokerage firm, Brookfield Financial (Brookfield).
Brookfield said the residential market is a new sector for these institutions even if they have been investing in European and US commercial property.
“What we see is a growing appetite for both [Asian] institutional investors and developers to invest outside of Asia,” said Richard Brown, Brookfield’s head of investment banking division for Asia.
He attributed the increase in interest to the rapid growth in assets of these institutions.
“There’s really no magic to it; their funds are growing at such a rate that they need to invest the money outside of the region in order to meet their liabilities,” noted Brown.
For now, these Asian institutions are “enamored with office and retail sectors”, with investors choosing office buildings in New York and London. Brown added that in future, these institutions will place their capital in overseas property.
Additionally, the Government of Singapore Investment Corporation (GIC), China Investment Corporation (CIC) and Korea Investment Corporation (KIC) have all made separate announcements of plans to raise allocations for global real estate.
“Residential has only just crept up on their [Chinese insurers’] menu,” Brown said. “They’re gearing up to [invest]; we haven’t seen much activity yet. But they will be a major factor, because clearly their wallet is very large and growing rapidly. Conceivably, their entering the market could have a significant impact.”
Nikki De Guzman, Junior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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