2017_亚洲房地产资本流动逆转（英文版）_16页_1mb

2017 – the year in which Asian property capital flows reverse: Fact or Fantasy?

Executive Summary

This report examines the patterns of Asian property capital flows from 2008 to 2017, highlighting the long-term trend of increasing outflows and decreasing inflows. Despite some fluctuations in 2016, the overall pattern remains consistent. The US has become the primary destination for Asian outbound capital, while intra-regional flows have surged, indicating stronger confidence in the Asian property market from within the region. The report also explores the implications of the US economic outlook and the potential shift in Chinese investment focus from outside to within Asia.

Core Content and Key Trends

Historic Asian Property Capital Flows

• Outbound Capital Flows: Rose 14x from USD4.2 billion in 2008 to USD58.9 billion in 2015.
• Inbound Capital Flows: Declined by 35% from USD24.9 billion in 2008 to USD16.2 billion in 2016.
• Intra-Regional Flows: Increased by 233% from USD20.8 billion in 2008 to USD69.3 billion in 2016, surpassing outbound flows for the first time since 2013.

Asian Outbound Capital Shifts to the US

• US Investment Growth: Asian investment in the US increased threefold to USD33.0 billion in 2015, and dropped by 12% to USD29.1 billion in 2016, still accounting for 49% of total outbound capital.
• Mainland Chinese Dominance: Mainland Chinese capital accounts for 43% of total Asian investment in the US.
• UK and Other Markets: UK remained the second most popular destination, with a 25% drop in investment in 2016, likely influenced by Brexit and the depreciation of the pound.
• Other Markets: Australia and Canada saw notable increases, with Australia up 86% and Canada 21x growth from a small base.

Asian Investors Prefer Office Property

• Office Segment Dominance: Office property accounted for 43% of total outbound investment in 2016 and has been the preferred segment for Asian investors for eight years.
• Hotel and Retail: Hotel property was the second most popular segment, with Chinese investors becoming the leading force in non-Asian hotel investments.
• Undeveloped Land: Least popular segment for outbound investment, though dominant in intra-Asian flows (70% of total).

US Outlook and Impact on Asia

Economic Outlook

• Short-Term: The US economy is expected to remain expansionary with moderate growth, supported by Trump's policies.
• Medium-Term: Growth is anticipated to slow, with potential recession risks by 2019 due to factors such as immigration policies, trade disputes, and budget deficits.
• Implications for the Dollar: The dollar is expected to remain strong in the short term but may weaken in the medium term if the US economy slows.

Chinese Investment Shift

Investment Outside vs. Within Asia

• China as a Major Investor: China dominated investment outside Asia, with USD37.2 billion in 2016, split between USD25.2 billion outside and USD12.0 billion within.
• Intra-Regional Investment: China accounted for only 17% of intra-regional investment, indicating a preference for overseas markets.
• Hong Kong as a Key Destination: Hong Kong was the largest source of foreign investment in 2016, with USD6.6 billion invested, driven by its proximity to China, political stability, and currency peg to the US dollar.

RMB Depreciation and Its Impact

• RMB Depreciation: The RMB depreciated by 13% against the US dollar between 2014 and 2016.
• Modest Depreciation in 2017: Expected to depreciate modestly (3-4%) against the USD, but not substantially.
• Hedging Strategy: Chinese investors use the US and Hong Kong as safe-haven options to hedge against RMB depreciation.

Focus on Key Markets

China, Hong Kong, Singapore, India

• China: Became the top investment market in APAC in 2016, with USD36.5 billion in property transactions, surpassing Japan.
• Hong Kong: Ranked third in APAC investment, with a 15% increase in transaction volumes.
• Singapore: Fourth in APAC investment, with a 38% increase in transaction volumes, partly due to a landmark USD2.4 billion transaction.
• India: Showed strong growth, with a 253% increase in investment volumes.

Urban Centres

• Tokyo and Shanghai: Dominated as the top urban investment markets, with Tokyo seeing a 40% drop and Shanghai a minor decline.
• Seoul: Surged by 142%, becoming the fourth-largest urban investment market in APAC.
• Sydney and Melbourne: Experienced declines, with Sydney down 21% and Melbourne down 45%.

Summary of Key Findings

• Outbound Flows: Continued to dominate, with the US being the primary destination.
• Inbound Flows: US and Middle East were the main sources, though the Middle East's interest was partly driven by a single large transaction.
• Investment Preferences: Office and hotel properties were the most popular segments for Asian investors.
• RMB Trends: Depreciation concerns drove investment abroad, but slower depreciation in 2017 may reduce such activity.
• Market Confidence: Intra-Asian investment growth suggests stronger confidence in the region's property market.

Conclusion

The report concludes that the reversal of Asian property capital flows in 2017 is more likely a fantasy than a fact. While there are signs of increased intra-regional investment, the long-term trend of outbound investment remains strong, driven by US economic strength and RMB depreciation concerns. The report also highlights the potential for future shifts in investment patterns, particularly as the US economic outlook evolves and the RMB stabilizes.