Rich Asian individuals are snapping up luxury residential properties and even office

Rich Asian individuals are snapping up luxury residential properties and even office towers in the West. But Asia’s biggest investors, including sovereign wealth funds, insurance funds and pension funds, are only just getting into the real estate game.

According to a new report released Wednesday by real estate firm CBRE, Asia’s institutional investors have just 1.7% of their assets in real estate, compared to as much as 8% by similar investors in Europe and North America.

That gap is likely to slowly narrow over the next few years, CBRE researchers say, as Asian institutional investors look for stable returns and diversification outside of stocks and bonds at home.

Helping the shift abroad, tough regulations limiting what Insurance and pension funds can buy are starting to ease. In China, for example, insurance companies were only permitted to invest in domestic real estate in 2010. South Korea’s National Pension Service (NPS) made its first direct real estate investment in just 2006. And Taiwan is only now considering to allow its domestic firms to invest in overseas real estate.

So far, the city that’s seen the greatest influx of Asian institutional money has been London, according to Marc Giuffrida, CBRE’s executive director of global capital markets in Singapore. South Korea’s NPS bought Hobard House in London for $336 million last year while Gingko Capital Management, an arm of China’s largest sovereign wealth fund, bought Drapers Garden, also in the English capital, for $438 million, according to data from Real Capital Analytics.

“They’re looking for fixed interest with a roof,” said Mr. Giuffrida. “In London, you can get long-term leases with fixed leases. All you need is a bank account to collect your money. That’s what they like.”

http://blogs.wsj.com/moneybeat/2013/07/31/asian-funds-set-to-snap-up-global-property/?mod=wsj_streaming_stream