London Is No Longer the Primary Target for Asian Outbound Capital
October 27. 2021
The 2010s were the Asian decade regarding wealth growth. As of 2018, Asia was creating more ultra-high-net-worth individuals (UHNWIs) than the rest of the world, according to a Wealth-X analysis.
To be sure, the region’s fertility for wealth did not relent even in the face of a global health crisis. A recent Knight Frank analysis (March 2021) showed the UHNWI population growth in nine Asia-Pacific (APAC) countries outpaces the rest of the world. Also, the research found that by 2025, the billionaire population in APAC will account for 41% of global billionaire wealth. Interestingly, Chinese billionaires will claim half of the riches.
For a long time, China has been the most significant source of Asian outbound capital. According to a 2018 Knight Frank survey, most Chinese mainland buyers preferred the London and Hong Kong property market. Over $43.98 billion in Chinese capital flew out of the country in 2017, and a substantial share went to the ultra-liquid London office market.
Chinese global real estate investment
Source: Knight Frank
But the investments began to dry up in the face of growing controls on the capital outflow from China. In mid-2018, authorities in Beijing started to restrict outward investment by its citizens to stabilize the yuan. The move came as the China-US trade war broadened and weighed heavily on the rising economic power.
Fast forward, Asian outbound capital is on the uptick again. How could this be possible, yet outward investment by Chinese residents is still highly regulated?
The uptick of Asian outbound real estate investment comes on the back of Singapore, taking the crown as the most significant source of capital in 2018. Singapore retained the title in 2019 and 2020.
Asian outbound investment by the source of capital
As Singapore attracts more wealth, its companies are growing more confident in snapping up properties abroad. Interestingly, these investors are showing more interest in properties in broader Europe and the US. To them, the US and European real estate markets are the “post-pandemic recovery play.”