Companies in Asia, including top conglomerates in the Philippines, are increasingly getting drawn to investing in European real estate.
Robert Scholten, head of ING Real Estate Finance (REF) Asia-Pacific, a unit of ING Wholesale Banking, considers deals such as the Torre Espacio acquisition a foretelling of deals to come.
Demand for European commercial real estate from Asian investors, including those from the Philippines, will grow in part due to their need for diversification of asset under management, the increase in buying opportunities and the attraction posed by lower interest rates and the Euro/USD exchange rate.
“It is likely that the outbound investment trend from Asia into Europe and also into other continents, including the Americas and Australia, for core quality real-estate assets will continue to increase over the coming years,” he predicted.
Scholten pointed to the growing number of sovereign wealth funds, life-insurance companies, asset management funds, and family offices from essentially every country across Asia as some of the parties investing in Europe.
“Well-informed real-estate investors are becoming increasingly aware that some of the overseas markets could offer interesting value propositions,” he explained.
Scholten said that ING REF is well positioned to cater to the influx of cross-border investments with its leadership position in real-estate finance. He noted that ING has over 220 dedicated real-estate financing experts in eight of the most liquid markets in Europe, teams in New York, Australia, Hong Kong and Singapore.
“Our global connectivity and local presence are particularly relevant to the current outbound investment strategy of Asian investors,” he said.
In 2015 alone, ING REF closed 80 deals amounting to €9.5 billion in total loan value, a post global financial crisis record year of real-estate lending for ING.
Fifteen out of the 80 transactions involved Asian institutional investors and family offices, and new investor segments such as Asian sovereign wealth funds—representing a double-digit percentage market share of all Asian institutional investment in Europe.
Torre Espacio is a 224-meter, 56-story tower that is considered one of the most iconic skyscrapers in Madrid. In November 2015 the family office of Filipino billionaire Andrew L. Tan acquired the Madrid property from Spain’s Grupo Villar Mir of international construction group OHL. ING Bank was the sole underwriter and mandated lead arranger for the €280-million, seven-year loan to finance 50 percent of the acquisition price.
ING Bank Manila Country Manager Consuelo D. Garcia said Europe, particularly Spain, which has close historic ties with the country, makes for a good destination for Asian investors because of its good valuation, transparency, ease of doing business and specialized high-tech sector, among other factors.
Garcia pointed to the very close and seamless collaboration among ING Bank Manila, ING REF Asia Pacific and ING REF Spain, and its syndications team in the successful closing of the Torre Espacio deal within a very tight time frame.
“Apart from its European and global expertise, ING has always had a strong underwriting capacity for sizable, complex transactions such as this one,” she said. The bank also boasts of a global network across 40 countries in Asia, Europe, US and Latin America.
In the Philippines ING Bank has developed into a key player in financial markets, mergers and acquisitions (M&A), and specialized sector financing, such as utilities, power, and infrastructure. It was the first foreign bank to upgrade into a universal bank in 1995. It has closed more than $17 billion worth of M&A deals for the government and its clients.