Commercial property investment worldwide will increase by at least 15 per cent this year. The annual total is forecast to be well over the US $600 billion mark, according to a report released from Knight Frank.
The report also points out that Chinese investment in the international property market will double this year and that transactions will reach their highest level since 2007.The report also highlights the fact that Taiwanese investors are actively seeking growth and diversification opportunities outside of local markets.
Peter MacColl, the head of capital markets at Knight Frank observed recently that their “range of target markets and tolerance to risk will increase.”
He stated that these investors will become more comfortable with tier 2 cities and will start to broaden their search for investment properties to consider new sectors, such as retail.
The change in strategy will be driven by a greater risk tolerance, the fact that pricing is strong in a number of capital cities and that there is a high level of competition for properties on the market.
The relaxation of rules around Taiwanese insurance companies’ ability to invest in foreign countries has made it possible for large insurance companies to step up to become major players on the world property stage.
There will still be strict criteria in place governing the companies’ ability to invest in international real estate, but several large operators are actively pursuing investment opportunities in other countries.
Over the short term, target markets are likely to be in gateway cities like New York, London, Tokyo, Paris and Shanghai. Target property sizes are at the larger end and range from US $150 million to US $400 million.
Cathay Life has recently received approval to pursue four assets in London. Fubon Life has suggested it could invest as much as US $3 billion in foreign properties over the next several years.
Investors are showing that they are prepared to take on a higher level of risk globally. There has been a strong upturn in activity in smaller European markets, such as Spain, Ireland, Italy and Portugal.
Taiwan’s biggest insurers could eventually invest as much as US $3 billion in property markets worldwide over the next two or three years. Over the longer term, they are likely to spend much more than that.
Outward investment will no doubt increase over time, and this will create opportunities for more inward foreign investment, as domestic owners adjust their allocations and dispose of unwanted assets.
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