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Asia-Pacific Leads Sources of Global Capital in H1

The Asia-Pacific region remains the dominant source of global capital this year, with Singapore, Hong Kong and Japan among the top five biggest global deployers of capital so far in 2023, according to a recent report.

Singapore tops the list of biggest global spender so far in 2023, followed by the US, finds the Global Capital Markets: Insights & Outlook – Global Capital Flows report, published by commercial real estate agency Colliers.

The Lion City, with cross border capital investments worth US$21.84 billion in H1 2023, now represents around a quarter of the total investments and is three times bigger as a spender this year versus Canada in the third position.

Source: Colliers, MSCI Real Capital Analytics

Hong Kong and Japan stood out as the fourth- and fifth-largest source of cross-border capital, spending approximately US$6.51 billion and US$5.15 billion, respectively, in the first half of this year.

Momentum was primarily being dominated by large institutions out of Singapore and Japan, as well as an increase in activity from the Australian superannuation funds, says Chris Pilgrim, managing director, global capital markets, Asia-Pacific at Colliers.

“In H1 2023, we have seen significant capital being deployed outside the Asia-Pacific region,” Pilgrim adds. “Globally, the US remains ultimately the most liquid market, which has attracted meaningful capital from the Asia-Pacific region. The UK has also benefited from Asia-Pacific capital, partly driven by the fast re-valuations of that market in comparison to parts of Europe and Asia-Pacific.

“Asia-Pacific real estate investors are equity rich, and those who are nimble and flexible have been able to diversify their strategies, targeting growth sectors and geographies within real estate asset classes such as healthcare, senior living and student housing.

“While Asia-Pacific investors, in general, remain active, both in terms of inbound and outbound capital, global investors, drawn to the depth of the market, also see potential for growth in the Asia-Pacific region with an increased number of funds from North America and Europe domiciling in Singapore for regional strategies.”

The Asia-Pacific region came out equally strong as an investment destination. Japan, China, Australia and Singapore are among the top 10 investment destination globally to date in 2023 with healthy investment growth seen across each of these markets.

Source: Colliers, MSCI Real Capital Analytics

“Asia-Pacific has expanded its influence as a global capital source, reflected by the prominence of Singapore, Hong Kong and Japan in the global top five,” Pilgrim points out. “Singapore tops the charts as the biggest global spender so far in 2023, with cross-border capital now representing 24.9% of total investment – up from 8.9% from 2018-2022. Singapore has spent most of its cross-border capital on real estate within its own region.

“Despite subdued economic growth outlook globally, the Asia-Pacific region is currently projected to increase this year to 4.6%, up from 3.8% in 2022. This means that the region is currently estimated to contribute close to 70% of global economic growth for 2023.

“Given this, we are positive that the Asia-Pacific markets will continue to outperform, while capital from the region will continue to be the dominant capital source in the global real estate markets.”

Source : The Asset