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Real Estate

Asian deals lift global real estate investment in 2017

Search for yield continued amid low interest rates

Hong Kong remained a hot market for property deals last year.

TOKYO -- International investors continued to show a strong appetite for real estate last year as it remained a source of relatively high returns in a low-interest-rate world.

Global property investment climbed 2.1% in 2017 to $957.6 billion, the second highest in the past decade, according to real estate services provider CBRE.

Investment in the Asia-Pacific region rose 19.9% to $140 billion, as many property funds anticipated economic growth in the region leading to higher rents and capital gains.

Hong Kong in particular saw a number of major deals, including the roughly $5 billion sale of tycoon Li Ka-shing's The Center skyscraper to a consortium of local and mainland Chinese investors. Property investment in Hong Kong surged 59% to $16.4 billion, data from real estate services firm JLL shows.

Singapore was another hot spot. A local real estate investment trust, CapitaLand Commercial Trust, acquired the Asia Square Tower 2 office and commercial building in Marina Bay for $1.5 billion last autumn. Japan also attracted foreign money, with Norway's Government Pension Fund Global, the world's largest sovereign fund, buying prime commercial buildings in Tokyo jointly with Japanese property group Tokyu Fudosan Holdings.

Meanwhile, investment in the Americas fell 6.3% to $480.9 billion, according to CBRE. The continued decline follows six years of growth until 2015 and reflects concern about rising office and commercial capacity pushing down rents.

With interest rates moving higher, "investors expect the spread between real estate yields [and interest rates] to narrow and they are growing cautious," CBRE's Hiroshi Okubo said.

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