Funds from East released

Predictions arising from research carried out by CBRE indicate that changes in legislation on the other side of the world could have a real impact on the commercial property markets in Europe and the USA. 

Until recently countries such as China, Taiwan and South Korea have had in place restrictions on investment by insurance and pension companies. However, this is now changing, with greater flexibility being permitted in respect of investments in international real estate. Traditionally, such funds have largely had their investments limited to liquid assets such as equities, government bonds and cash. The gradual release on these limitations, to permit a greater proportion of investment in overseas real estate, could see a flood of Asian investments into the property markets in the West. 

The research suggests that as much as £43 billion could be added to the global real estate markets over the next four years. The potential increase in investment – likely to focus on London and New York, together with certain other targeted cities – is compounded by the increase in insurance funds in these Asian countries. With burgeoning economies and the incomes of workers increasing significantly, the funds at the disposal of insurance and pension funds are also growing, and aiming for real estate. 

Such funds are likely to head to Europe and the USA given the limited supply of investable property in Asia, although it is expected, according to the research, that Japan will be more likely to keep investing at home. 

Chinese companies have been permitted by the government to invest in overseas assets since 2012, with 30% of a fund’s total assets now being permitted in property, a rise from 20% having been implemented earlier this year. 

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