Over the last 12 months, Asian property investors have started directing capital to other areas of Europe besides London, which has been their primary investment destination in this cycle, according to research from Catella.
Continental Europe can expect to see huge volumes of real estate investment from the region in the future, the property specialist asset manager said.
In a report, it forecast investment inflows into European property markets of up to €14bn in 2015, with investors increasingly diversifying those investments to include assets in certain target countries outside the UK.
Catella said it found in its study that Asian investors – and Chinese investors in particular – had cited stability as an argument for their European property investments.
There is also fierce competition from Asian investors for ‘trophy’ buildings, it said.
Thomas Beyerle, managing director of Catella Property Valuation in Frankfurt, said: “While London has been and still is the number one destination for Asian capital, this sentiment has spread in the past four quarters, not only to France (…) but also in Belgium, Germany and Spain.”
During 2014, 2.5% of the share of the commercial investment market attributable to Asian investors was directed to France, 14% to Belgium, 6% to Germany and 3% to Spain, he said.
Since 2007, capital flow from Asia to Europe’s property markets has doubled over five years, according to the report.
Regions favoured by Asian investors in 2014, were London – with the city taking more than half of the capital originating in Asia (€5.42bn) – distantly followed by Frankfurt with around €800m and Paris with €511m.
Catella said these three European financial centres accounted for about 70% of total Asian investment in the Continent.
But secondary UK locations such as Bristol, the East Midlands and eastern England had attracted about €950m in investment, it said.
“This implies Asian investors are becoming less risk-averse and more interested in diversifying their portfolios,” it said, adding that it expected to see a similar development in the French and German real estate markets.
Source: IPE Real Estate