According to CBRE’s latest special report, Asia Pacific institutional investors, including those from Hong Kong and mainland China, are expected to pump an additional US$240 billion into the world property markets by 2020. The total allocation of APAC investors into global real estate is expected to reach US$500 billion—nearly double the US$260 billion invested as of end-2014.
Ada Choi, Senior Director, CBRE Research Asia Pacific, said, “five of the top ten global sovereign wealth and pension funds are from Asia Pacific, including the Exchange Fund in Hong Kong (7th largest) and SAFE from China (6th largest). A number of these institutions have announced plans to further increase their allocations to property investments.”
In March 2015, the Hong Kong Government announced plans to establish the Hong Kong Future Fund to invest in high return assets, with 50% of the fund allocated to alternative investments such as real estate. Choi expects that this will prompt other APAC institutions to make similar investments.
APAC institutions—which include sovereign wealth funds (SWFs), pension funds and insurance companies—are cash-rich, currently sitting on a combined war chest of nearly US$15 trillion as of end-2014 1, representing around 25% of total global AUM. Capital has traditionally been allocated to equities and bonds, but there is an increasing need for diversification into other asset classes.