Investments on S’pore properties among foreign investors surge in 2013

Total investments on Singapore properties among international investors surged to S$6.4 billion last year, says property consultancy Knight Frank.

This was nearly double the S$3.4 billion in 2012.

The residential segment accounted for the majority of the investments, but analysts say investors are shifting their focus to hotels and commercial properties.

“The Panorama” in Ang Mo Kio by Hong Kong’s Wheelock Properties was one of the top five major transactions by international investors in 2013 – at S$550 million.

Knight Frank Research says it is second to the S$1.1 billion investment on Grand Park Orchard Hotel by China’s Bright Ruby Resources.

Of the five transactions, three are residential developments — The Panorama, Mount Sophia and MCL’s Jurong West project LakeVille.

But analysts say investments in the residential segment have declined as a proportion of total sales.

“For 2012, residential investments make up approximately 65 per cent (of total sales) whereas in 2013, it only makes up 49 per cent with more investors looking towards the commercial sector,” said Ian Loh, head of investment and capital transactions at Knight Frank.

“There remains a large group of Chinese developers for example, who are still positive about the residential market.”

Eli Lee, head of real estate equities at OCBC Investment Research, said: “The bias is certainly toward commercial properties, not least because of the many bouts of government cooling measures we have seen in the last three to four years.

“The outlook for residential properties over the shorter term is unfortunately negative. There are headwinds for the sector, again due to the government measures that we have seen and also the looming spectre of rising interest rates.”

Hotels are also expected to find favour this year.

Colliers International said there was a deal in 2012 — valued at S$210 million — and three in 2013 — at a total value of over S$1 billion.

Tang Wei Leng, executive director of investment services at Colliers International, said: “For Singapore, there are many stats to support the hotel growth story, with new terminals, new tourist attractions and the Singapore government’s efforts to bring in… business travellers or tourists.

“The storyboard is good, plus hotels as a segment are always very attractive. It is a very visible acquisition.”

Knight Frank says Chinese investors accounted for over half of the total international investment in 2013 at S$3.5 billion.

This was followed by Hong Kong at S$1.4 billion – with 21 per cent of total investment – while Malaysia was third with S$600 million – with about 10 per cent of the total.

Knight Frank says international investors are also increasingly looking at opportunities in emerging markets like the Philippines, Cambodia and Myanmar, as they offer a bigger profit margin, albeit at higher risk.

Looking at 2014, Knight Frank says total investments by international players could range from S$4 billion to S$5 billion as many government land sales — which investors tend to favour — are on the Reserve List.

Still, analysts believe Singapore will remain an attractive investment destination.

“Singapore should remain a haven for capital when markets are as volatile and opaque as they are,” said said Tim Gibson, co-head for Henderson Horizon Global Property Equities Fund & manager of the Henderson Horizon Asia Pacific Property Equities Fund.

“Having liquidity, transparency and a stable currency are all attractive characteristics to have at times like these.”

Overall, analysts say local investors still accounted for majority of investments in Singapore.

Knight Frank says total investments came up to just over S$27 billion in 2013. Of these, international investors made up 23.7 per cent of the total at S$6.4 billion, while local players accounted for 49 per cent at S$13.3 billion.

Real estate investment trusts contributed 27.3 per cent of the total investment at S$7.4 billion.

Source : Channel NewsAsia – 27 Mar 2014

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