The rapid spread of coronavirus is expected to hit global real estate investment in the short term, with a drop in demand anticipated from Asian dealmakers.
Henry Chin, head of research for Asia Pacific and EMEA at CBRE, said: “Given the ongoing travel restrictions as a result of Covid-19, we expect to see a short-term drop in investment volumes [from Asia] but we do not anticipate investors deviating from their long-term strategies to deploy capital into real estate.”
He added: “We expect Asian investors, especially from Singapore and South Korea, to continue to show a strong intention to invest into overseas real estate in 2020, particularly in mature markets with steady income streams.”
Last year saw a 17% drop in outbound investment from Asia compared to 2018, at $45bn (£34bn), of which $17.1bn was in EMEA.
CBRE attributed the fall to fewer big transactions and weaker activity from Chinese investors to ongoing capital controls. Outbound investment from China fell for a second consecutive year.
Asian investment into Europe fell by 13%, although despite this overall decline outbound investment from Korean investors rose by two-thirds to $12.5bn, of which nearly 70% was into Europe.
Paris was a notable beneficiary of Korean investment. Of $4.8bn spent in Paris by Asian investors, Korea accounted for 80% as Korean investors took advantage of low financing costs and a hedging premium between the Won and the euro.
However, CBRE expects the flow of Korean deals to slow down due to syndication challenges back in its domestic market for the overseas property already bought and the travel issues stemming from Covid-19.
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