At least US$20 billion in global funds could be invested into properties in Singapore this year.
This is according to a report by the global office of property consultancy DTZ.That is about 10 percent of the US$200 billion that DTZ expects will be channelled into properties in the Asia Pacific in 2007.
At US$200 billion, this amount of money is a jump of some two thirds from 2006.
And according to DTZ, the bulk will come from global investment funds.
They are seen as targeting all property sectors – residential, offices, retail and industrial – as real estate has been performing better than equities in recent years.
Joe Valente, Director, Head of Research, DTZ UK, said: “There is a huge wave of worldwide capital waiting and wishing to invest in real estate worldwide. There are all sorts of reasons for that, but we would estimate that at the moment there is something close to US$2.5 trillion looking to be invested in real estate, and probably around 30 to 40 percent of that is looking for a home in the Asia Pacific.
“The key problem in all of this is actually finding sufficient investment grade stock in good locations that are expected to outperform.”
Japan will snap up about half of the money coming into Asia-Pacific.
But Singapore is among the top five destinations in the region – along with Australia, China and Hong Kong.
“We’re expecting Singapore to capture 10 to 12 percent market share of the total amount of capital that is looking for a home within Asia markets. That hasn’t changed quite significantly over the last two or three years. And much of that has to do with the liquidity and transparency of Singapore, which makes it a much more mature market compared with other emerging markets in Asia,” said Mr Valente.
In Singapore, DTZ expects residential and office properties to do particularly well.
But it said the retail and industrial sectors would lag behind their counterparts in Japan and China.
The Head of Research said: “On a global basis, the level of performance that I would expect to get in retail within Singapore, and in industrials within Singapore are far in excess of the sort of returns that I would expect to find in European markets or in US markets. So that’s a positive point for Singapore.
“However, in relative terms, there are one or two, or three or four other markets in Asia which are likely to outperform Singapore’s performance, so all else being equal, that’s where I would go for those particular sectors.”
Overall property investment sales in Singapore hit over US$6 billion in the first three month of this year.
Source: Channel NewsAsia, 30 March 2007