The health of Asia’s property market faces a number of threats in 2015, real estate investors say, but rising US interest rates appear to be a far less important concern than in previous years.

Yet despite regional uncertainty and its domestic difficulties, China is still seen as the most attractive market for cross-border investment.

In the annual CBRE Asia Pacific Investor Intentions Survey* released yesterday, the key threats to the regional real estate market were seen as overvaluation, an excess supply of property and the possibility of a hard landing in China.

The impact of a rise in US interest rates on local property prices in Hong Kong and Singapore has been one factor driving investors to look overseas, the property services firm said.

Hong Kong’s property market faces the greatest threat of “collateral damage” in the wake of US rate rises, followed by Singapore and “then perhaps China” observed Cambridge Associates fund selector Johnny Adji at the PERE Asia Summit.

Hong Kong and Singapore investors accounted for more than $18 billion of the $40 billion total Asian outbound direct real estate investment last year, according to CBRE’s figures.

One change that could see Asian outbound real estate investment slow is a rolling back of property market restrictions in Singapore and Hong Kong. But Chris Reilly, Asia-pacific managing director of TIAA-Henderson Real Estate, said he did not see that happening this year.

“It may be that activity in Japan and Australia could decline a bit,” he said, but even if that happened, increased flows into markets like China were likely to compensate.

According to the CBRE survey, China (31%) will be the most attractive destination for cross-border Asian direct real estate investment in 2015, followed by Japan (21%) and Australia (11%).

But investor intentions at the start of the year do not always match up with investor activity. Japan’s office sector accounted for 14% of capital deployed in 2014 - far higher than the 6% figure predicted in last year’s CBRE investor intentions surveys and the 10% anticipated by this year’s survey.

In contrast, the industrial and logistics sectors in Australia and China saw far less capital deployed (3% combined) than anticipated in the 2014 and 2015 surveys (19% and 17% respectively).

Outside of Japan office, Australia industrial and logistics and China industrial and logistics – which were the top three sectors in 2014 according to investor intentions – capital deployed largely matched investor intentions last year.

Lower interest rates across many Asian countries has seen demand for prime core real estate jump from 29% in last year’s CBRE survey to 43% this year.

Interest in value added and opportunistic investment strategies has waned amid ongoing uncertainty about economic growth. As a result, India, Indonesia and Malaysia moved down the rankings among markets that Asian investors are targeting for direct real estate investments.

*CBRE’s Asia Pacific Investor Intentions Survey 2015 was based on 317 responses from investors in Asia Pacific real estate, up from 122 responses last year. It was conducted between January 8 to 30 this year.