Bookmark & Share
Singapore investors poured in about US$8.4 billion (S$11.48 billion) in Asian properties last year, up 15 percent from the US$7.3 billion (S$9.97 billion) seen in 2013, according to the latest report from Colliers International.
In particular, the top three destinations in Asia for their capital were Tokyo, Kowloon and Shanghai, where the most popular assets include offices, development sites and retail space.
As for property investments outside the region, Singapore investors spent around US$11.9 billion (S$16.26 billion), representing a 32 percent surge from US$9 billion (S$12.29 billion) previously. Specifically, they preferred to invest in Sydney, Manhattan and London, with offices, industrial space and hotels being the most sought-after asset class.
“Typically, local investors are venturing out of Singapore to seek better yielding opportunities, as there is a lack of attractive ones at home,” said the consultancy, noting that the government’s property cooling measures have dampened the growth of returns in the domestic market, while the opportunities beyond Asia offer higher yields with lower associated risks.
Colliers also said Singapore investors looking outside Asia because they have amassed a high level of wealth in the past ten years. Properties in Australia, Europe and Japan have also become more appealing thanks to the rising exchange rate of the Singapore Dollar against the currencies of these countries, it added.
“Singapore investors will likely be buying an income-producing asset in a key gateway city that has a net yield of around five percent, with tenancies for as long as they can get. This serves as bond-like investment instrument for them,” said Terence Tang, Colliers’ Managing Director of Capital Markets & Investment Services for Asia.
Moving forward, these investors are expected to remain on the lookout for properties with high yields across key markets around the world in 2015 and 2016 due to the lack of investment opportunities at home.
In Asia, Japan and India are among their potential investment targets. Elsewhere in the globe, secondary cities like Munich, Cologne, Barcelona and Milan are starting to be on the radar for more adventurous investors seeking higher yields, but major cities such as London, New York, Sydney and Melbourne are still very popular with Singapore investors.
Similarly, mature markets where professional services are easily available, such as Australia and the UK, are expected on the crosshairs of daring developers, who are prepared to undertake projects despite the risk.
For the United States, Tang added that “Singapore investors will continue to be interested in investing in the US, although most find it difficult to enter the markets due to the high tax environment and restrictive tax regime. With an increasing cost of funds, we expect Singapore investors to slow down their activities and re-examine their strategies in the US towards the second half of the year.”
Aerial photo of Sydney.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
Related Articles:
Singapore office market is stable: JLL