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  • Trends and Strategies for Outbound Real Estate Investments Presented by

    Dr Henry Chin

    Head of Research, Asia Pacific

    CBRE

  • 2 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    What are investors thinking?

    Continue to commit more capital into real estate

    Increase risk appetite, but prefer to stay at domestic markets

    CRE is perceived to be overpriced by investors

    Where are investors going?

    Strong growth in global investment activities

    Less inflow but more outflow from Asia Pacific

    Increasing RE allocation from Asian institutional investors

    How will investors allocate their capitals globally?

    Progress of institutionalization of real estate investments and industries

    Multiple options to deploy capitals

    Various investment themes globally based on risk-return profiles

    KEY MESSAGES

  • WHAT ARE INVESTORS THINKING? Key Findings from Investor Intentions Survey

  • 4 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    Compared to 2013, what can you expect your purchasing activity

    to be in 2014:

    MAJORITY OF INVESTORS WANT TO DEPLOY MORE CAPITAL IN 2014

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    Europe Asia Pacific North America Global

    Survey region

    More than 20%higher

    Between 10%- 20%higher

    Up to 10% higher

    About the same

    Up to 10% lower

    Between 10% - 20%lower

    More than 20% lower

    Source: CBRE Investor Intentions Survey 2014 (May 2014)

    More purchases

    Less purchases

  • 5 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    AND PREFER GLOBAL MAJOR CITIES

    30% 14% 9%

    London Madrid Berlin Munich Paris

    6% 6%

    Sydney Tokyo Shanghai Melbourne Jakarta

    18% 17% 11% 8% 6%

    Source: CBRE Investor Intentions Survey 2014 (May 2014)

    Asia Pacific

    Europe

    North America 8.5%

    SF LA SEA NYC HOU

    7% 5.5% 5% 5%

  • 6 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    44% APAC investors intend to invest outside APAC

    ASIANS ARE TARGETING AT GLOBAL MARKETS

    Pacific

    11%

    Western Europe

    16% North America

    20% Developed Asia

    23% Emerging Asia 23%

    Central & Eastern

    Europe

    7%

    0% 20% 40% 60% 80% 100%

    Europe

    Asia Pacific

    North America

    Global

    Yes, more than in 2013 Yes, same as in 2013

    Yes, less than in 2013 No

    Investing outside the own region in 2014? Preferred region

    Source: CBRE Investor Intentions Survey 2014 (May 2014)

  • 7 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    Most attractive countries for investment in Asia Pacific

    Among cross border investors only

    IN APAC, CHINA, AUSTRALIA AND JAPAN DOMINATE AND ATTRACT DIFFERENT SOURCES OF CAPITAL

    Source: CBRE Asia Pacific Investor Intentions Survey 2014

    * Cross border refers to respondents domiciled in the different country as the most attractive destination selected

    0% 10% 20% 30%

    Philippines

    New Zealand

    Hong Kong

    Taiwan

    Thailand

    Singapore

    Vietnam

    Malaysia

    South Korea

    India

    Indonesia

    Japan

    Australia

    China

    Int'l Investor

    Asia Investor

    Pacific Investor

    n = 80

  • 8 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    40%

    45%

    50%

    Prime or coreassets

    Goodsecondary

    Opportunistic /value-added

    Distressedassets

    STRONGER APPETITE FOR RISKIER ASSETS Count of Final Size (mn USD)

    Primary Strategy Total

    Core 7

    Core-Plus 13

    Debt 23

    Distressed 15

    Fund of Funds 9

    Opportunistic 45

    Secondaries

    Value Added 45

    Grand Total 157

    Sum of Final Size (mn

    USD)

    Primary Strategy Total

    Core

    1,839

    Core-Plus

    2,214

    Debt

    12,237

    Distressed

    12,701

    Fund of Funds

    1,076

    Opportunistic

    34,698

    Secondaries

    Value Added

    17,534

    Grand Total

    82,298

    Source: CBRE Asia Pacific Investor Intentions Survey 2014

    Most preferred asset type for purchases Appetite for secondary assets compared to last year

    Preferred asset type and appetite for secondary, Global survey

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    40%

    45%

    50%

    Muchhigher

    Higher Same Lower Much lower

  • 9 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    LOGISTIC SECTOR IS EMERGING

    0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

    Office

    Industrial & Logistics

    Retail

    Residential

    Hotel

    Other

    Europe

    Asia Pacific

    North America

    Global

    Source: CBRE Investor Intentions Survey 2014 (May 2014)

    *Others: Land

  • 10 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    BUT LACK OF TRADABLE ASSETS REMAINS AN ISSUE FOR LOGISTICS

    -20% -10% 0% 10% 20% 30% 40% 50% 60%

    -20% -10% 0% 10% 20% 30% 40% 50% 60%

    Asia Pacific office

    North America residential and others

    Europe office

    Asia Pacific retail

    North America office

    Europe residential and others

    North America retail

    Europe retail

    Asia Pacific residential and others

    Europe industrial and logistics

    Asia Pacific industrial and logistics

    North America industrial and logistics

    Investor Intentions Survey 2014 Market activity 2013 (as % of regional total) Difference (intentions - activity)

    10

    2013 Investment Market Activity V 2014 Investor Intensions Surveys

    Intentions

    outpace actual

    capital

    deployment

    Intentions behind actual capital deployment

    Source: CBRE Investor Intentions Survey 2014 (May 2014)

  • 11 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    Percentage of respondents

    KEY CONCERNS AMONG INVESTORS

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    Perception that property hasbecome over-priced

    US tapering, rising interest ratesand/or threat of inflation

    Global/APAC Economicweakness

    Domestic economic measures,government austerity policies

    Other financial / political crisis

    Government policy measuresrelating to property

    Inability of investors to sourcenew debt

    Others

    AsiaPac

    EMEA

    AmericasEMEA

    Americas

    Source: CBRE Investor Intentions Survey 2014 (May 2014)

    AsiaPac

  • 12 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    0.0

    0.5

    1.0

    1.5

    2.0

    2.5

    3.0

    3.5

    4.0

    4.5

    Asia Pacific World United States Eurozone

    2013 (E ) 2014 (F)

    YoY

    GD

    P G

    row

    th (

    %)

    CLEAR RECOVERY IN THE WEST

    Source: Oxford Economics (As of April 2014)

    Slightly slower but

    robust growth Firmer recovery

  • 13 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    Central Bank policy rate, end-of-period

    DIFFERENT TIMING OF ENTERING UPWARD CYCLE

    0

    1

    2

    3

    4

    5

    6

    200

    6 Q

    1

    200

    6 Q

    3

    200

    7 Q

    1

    200

    7 Q

    3

    200

    8 Q

    1

    200

    8 Q

    3

    200

    9 Q

    1

    200

    9 Q

    3

    201

    0 Q

    1

    201

    0 Q

    3

    201

    1 Q

    1

    201

    1 Q

    3

    201

    2 Q

    1

    201

    2 Q

    3

    201

    3 Q

    1

    201

    3 Q

    3

    201

    4 Q

    1

    201

    4 Q

    3

    201

    5 Q

    1

    201

    5 Q

    3

    201

    6 Q

    1

    201

    6 Q

    3

    201

    7 Q

    1

    201

    7 Q

    3

    201

    8 Q

    1

    201

    8 Q

    3

    201

    9 Q

    1

    201

    9 Q

    3

    202

    0 Q

    1

    202

    0 Q

    3

    Japan

    Eurozone

    United States

    Forecast

    Japan

    Eurozone

    United States

    Source: Oxford Economics, IHS, June 12, 2014

  • CAPITAL FLOW Where are investors going?

  • 15 CBRE | CHINA OVERSEAS REAL ESTATE INVESTMENT SUMMIT | 2 JULY, 2014

    Global commercial real estate investment

    GRADUAL RECOVERY IN INVESTMENT TRANSACTIONS

    0

    50

    100

    150

    200

    250

    Q1

    20

    07

    Q2

    20

    07

    Q3

    20

    07

    Q4

    20

    07

    Q1

    20

    08

    Q2

    20

    08

    Q3

    20

    08

    Q4

    20

    08

    Q1

    20

    09

    Q2

    20

    09

    Q3

    20

    09

    Q4

    20

    09

    Q1

    20

    10

    Q2

    20

    10

    Q3

    20

    10

    Q4

    20

    10

    Q1

    20

    11

    Q2

    20

    11

    Q3

    20

    11

    Q4

    20

    11

    Q1

    20

    12