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City Developments Limited (CDL) thinks this year is an opportune time to buy offices, as rising interest rates make such properties across the globe more affordable.
“We are coming into a very good time for acquisitions,” said CDL’s CEO Grant Kelley, in an interview with Bloomberg. “The long-term trend for assets for the next 12 to 24 months could be deflationary because I believe as interest rates go up, fixed income will become more attractive, and maybe liquidity will drain from real estate assets a little bit.”
Notably, CDL has invested in overseas real estate after Singapore’s government introduced a series of property cooling measures. Over the past two years, the company has pumped more capital into hotels and residential properties. But Kelley said its preference may shift towards office space if good deals become available in 2016 or early-2017.
Specifically, the developer intends to focus on five markets: Japan, China, Australia, the United States and the United Kingdom. Overall, it plans to invest around S$5 billion in offshore markets by 2018.
In its latest financial report, CDL’s earnings dropped by 14 percent year-on-year to S$105.3 million in Q1 2016, while revenue fell 11 percent to S$723.3 million.
As part of its plan to grow its fund management platform, it has closed two deals with a combined worth of S$2.6 billion since December 2014. Over the next two years, it hopes to increase its assets under management (AUM) to S$5 billion, added Kelley.
Meanwhile, CBRE believes that market volatility would raise the appeal of real estate as a safe haven for cash. Therefore, global property investments could climb by 6 percent on an annual basis to over US$1 trillion (S$1.38 trillion) in 2016.
Cheryl Marie Tay, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories, email cheryl@propertyguru.com.sg
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