Where global investors are setting up new offices

Canadian, European and U.S. investors are opening and expanding offices in Asia Pacific in search of diversification, yield and growth in the aftermath of the COVID-19 pandemic.

Among those establishing new outposts is Cadillac Fairview, wholly owned by Canada’s Ontario Teachers’ Pension Plan, which is opening an office in Singapore at the end of 2021. U.S. investor Hines has also been expanding into the city state.

Canadian firm Ivanhoe Cambridge is setting up in Australia next year, while Germany’s Patrizia has recently announced plans to expand into Japan.

Transaction volumes have been increasing in APAC for years. But the new office openings come amid rising prices and declining yields for high-quality real estate around the world since the pandemic, prompting a gear-change for investors.

“Investors are gearing their portfolios more towards resilience, which is driving them to diversify geographically and across property type,” says Singapore-based Kate Low, senior director in international capital – Australia, JLL. “With increasing pent-up capital, investors recognise the opportunity for compelling returns and acknowledge the demographic drivers of APAC.”

Although Asia Pacific cross-border activity is yet to reach pre-COVID-19 levels due to travel restrictions, there are signs of recovery. In the third quarter of this year, investments in APAC reached US$125 billion, just 6 percent below 2019 levels and 30% up year on year, according to JLL. The firm forecasts deal volumes to rise up to 15 - 20 percent by the end of the year. 

At the same time, 87 percent of institutional investors from Europe and 65 percent from North America expect to increase their allocation to APAC over the next two years, according to JLL.

Among those is Allianz, one of many overseas groups which have been established in Singapore for several years with the aim of being closer to deals. The group plans to increase its assets under management in APAC to 15 percent over the coming years from 9.6 percent.

Singapore’s business and expat-friendly regulatory framework, along with its political stability, make it a preferred base for global investors and ideal gateway to APAC markets. The city-state was also ranked the safest place in Asia in Bloomberg’s COVID-19 resilience ranking in August 2021.

One of the first groups taking advantage is Singapore’s GIC, which is among the world’s biggest sovereign wealth funds, due to open an office in Australia in 2022. The move comes on the back of its A$3.8 billion (US$2.72bn) joint venture purchase with ESR of Blackstone’s Milestone logistics portfolio in June this year – Australia’s largest ever portfolio deal.

“As soon as international borders open, we expect to see an influx of offshore capital desperate to make a trip to Australia,” says Fergal Harris, JLL’s head of capital markets, Australia. “Dry powder has rebounded to a new record in the first half of this year with only 7.5 percent of APAC real estate funds allocated out of a targeted 11.5 percent. We can’t underestimate the value of physical inspections for key groups even though a majority have been bidding site-unseen.”