CBRE Global Investors, which manages more than $90 billion of property assets, expects cross-border real estate acquisitions to reach a record this year as Asian investors diversify abroad.
Transactions sourced from one region and invested in another will reach as much as $2 billion in 2013, CBRE Global Chief Executive Officer Matthew Khourie said. Much of the money will come from Asian investors, such as sovereign wealth funds, buying property in the U.S. or Europe, he said.
“Over the next 12 to 18 months, we will see increased demand from the U.S. and European investors in the emerging markets,” Khourie said in an interview in Singapore yesterday. “Asia is also becoming a very big source of capital for other parts of the world. They are a big group that’s actually very competitive and trying to buy trophy assets in the U.S.”
Asian investors are after assets with lower risks and moderate yields, while U.S. investors are looking for greater returns in emerging markets with slightly higher risks, said Khourie. International investors made $7.97 billion in U.S. commercial-property purchases this year through April, a 25 percent jump from the same period in 2012, according to Real Capital Analytics Inc.
The families of Chinese real estate developer Zhang Xin and Brazilian banking billionaire Moise Safra last month bought a 40 percent stake in New York’s General Motors Building. In March, Overseas Union Enterprises Ltd., a Singapore-based commercial landlord and developer, agreed to buy the U.S. Bank Tower in Los Angeles, the West Coast’s tallest office building, for $367.5 million.
Sovereign wealth funds made 38 property investments valued at almost $10 billion in 2012, according to the Sovereign Investment Lab at Bocconi University in Milan, which has data going back to 1985. Such deals were 21 percent of all sovereign fund investments last year, the highest percentage on record and topping the 2011 high of 16 percent.
Government of Singapore Investment Corp. invested in a 48-story, glass-and-granite cylindrical building in San Francisco’s financial district in December, while China Investment Corp. purchased Winchester House, leased by Deutsche Bank for its City of London headquarters, from KanAm Grund KAG, the seller announced in November.
Los Angeles-based CBRE Global acquired a majority of ING Groep NV’s real estate investment business in 2011. CBRE Global managed about $3.7 billion of assets in the Asia-Pacific region as of the end of the first quarter, according to its website.
“We need to be much bigger than that in Asia,” Khourie said. “Our intention is to really grow that substantially.”
Asia will have the highest growth rate for CBRE Global among all the regions in the world over the next five to 10 years, Khourie said. The office market in Japan, which is showing signs of a recovery, and Australia’s property market are attractive investments for the long term, he said.
In China, CBRE Global is looking for projects in Beijing, Shanghai, Guangzhou and in as many as 10 second-tier cities, including Chengdu, Wuhan and Suzhou, the fund’s Greater China Country Manager Richard van den Berg said at a conference in Hong Kong last week.