Overpriced property rattles APAC investors

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Offshore property investors from around Asia Pacific have voiced out their biggest concerns this year.

Ginza_at_Night,_Tokyo

According to the annual CBRE Asia Pacific Investor Intentions Survey released this week, real estate investors in the region are primarily concerned about asset pricing, with nearly a third of respondents (31 percent) saying that overpriced properties are the “biggest obstacle to acquisitions,” while some (21 percent) called them the “greatest threat” to the region.

Investors are also slowly shifting back to major mature markets to reap long-term benefits, citing Tokyo, Shanghai and Sydney as the most attractive investment cities. Almost half (45 percent) would more than likely invest in prime core assets as a reflection of their cautious mood.

Related: Tokyo has been named Asia’s largest commercial property market

Just how cautious have Asian outbound investors become in 2015? Only 54 percent of investors have intentions to buy this year, down from last year’s 64 percent.

Despite its cooling market and having economic uncertainties, Mainland China is currently seen as a top destination by Asian cross-boarder investors, with 31 percent of the poll respondents preferring it to Japan (21 percent) and Australia (11 percent).

However, the rising US interest rates on local property could have a potential negative impact on China’s real estate market, and the probability of Chinese investors looking for overseas target remains high. But before US rate hike issues affect China, experts believe that the “collateral damage” would hit Hong Kong and Singapore first.

Related: Singapore tops cross-border investment list again

Aside from China, regional investors from South Korea, Singapore and Hong Kong also exhibited strong interest in outbound investments, especially in the office and logistics sector, while demand for hotels and resort properties are gaining more traction.

Meanwhile, as investors look for other opportunities from within Asia Pacific, more than half of respondents (56 percent) have begun choosing alternative sectors, including real estate debt, infrastructure, and leisure and entertainment.

A total of 317 responses were received from cross-border investors living in another country for this 2015 survey conducted throughout most of January, up from only 122 poll replies from last year, according to CBRE Global Research.

 

Ginza district, Tokyo by Francisco Diez was used under a Creative Commons licence.

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