Asian institutional investors are eyeing Dubai property to funnel some of the $150bn they are expected to invest in global real estate over the next five years, according to a new report.
With low interest rates and weak stock markets globally, Asian investors are increasingly turning to real estate to maintain returns, CBRE said in its report.
They presently allocate only 1.7 percent to property assets, compared to 6-8 percent for institutional investors in North America and Europe.
CBRE says Dubai, London, New York, Sydney and other gateway cities are the key locations being assessed.
“Dubai’s strategic location between the East and the West, and its rapidly developing real estate market is gaining strong investor appetite from Asia, specifically from China, Malaysia and South Korea,” CBRE Middle East managing director Nick Maclean said.
“During the past 12 months we have witnessed a significant increase in enquiry levels particularly focused on Dubai income producing assets, driven by an expectation of further growth in rental and capital values.”
Asian investors’ acquisitions outside the region surged from $2bn in 2008 to almost $9bn in 2012, CBRE said.
However, Europe, North America and Australia remain the most heavily popular regions outside of Asia.
CBRE said even if Asian investors increased their real estate allocation by a conservative 2.5-3.5 percent in the next five years would translate to $150bn into the global real estate investment market.
A large volume of prime commercial property in the development pipeline in Asia Pacific may partly alleviate the pressure.
“Asian institutional investors are already beginning to acquire assets overseas, with core assets in gateway cities being the most sought after asset class,” CBRE president of global capital markets Chris Ludeman said.
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