Expected 15-20% hike in global investment activity - likely to surpass US$1t - will generate strong investor sentiment here
The Business Times - March 19, 2013
SINGAPORE can expect a significant uptick in property investment activity this year, on the back of an expected 15-20 per cent increase in global investment activity, which is likely to surpass US$1 trillion for the first time since 2007.
John Stinson, managing director of capital markets in Cushman & Wakefield (C&W) Asia-Pacific, said: "Cooling measures in Hong Kong (double stamp duty) and China (more aggressive implementation of capital gains tax) will generate strong investor sentiment for Singapore and Tokyo." This is a turnaround from last year, a slow year of investment trading, which is defined in the report as deals of US$5 million and above; last year, Singapore saw virtually no price growth, he said.
Investments in Singapore picked up only in the second half of last year, notably with higher investments in office properties as sentiment improved. On the flip side, values of total Singapore development sites were slightly lower last year, coming after the sale of good sites such as Bishan Street 14 the year before.
Government Land Sale sites were also susceptible to cooling measures implemented by the government, which led to more measured bids from developers. Said Mr Stinson: "Hong Kong, on the other hand, experienced strong activity and price growth; we anticipate that, with pent-up demand and a move away from the more active markets of Hong Kong, Singapore will benefit most."
Indeed, both the Asia-Pacific and the Americas are expected to see investments increase 15-20 per cent. It will hit US$509.3 million in the Asia-Pacific and US$347.4 million in the Americas. In Europe, the Middle East and Africa (EMEA), investments are expected to rise 5 per cent to US$204.0 million. This will push investment volumes on a global basis up by 14 per cent to reach US$1.06 trillion, breaching the US$1 trillion mark for the first time since 2007, said C&W.
For the whole of last year, the global property investment market saw a modest 6 per cent rise in activity, with volumes of up to US$929 billion, driven by a strong fourth quarter, revealed C&W in its International Investment Atlas Summary 2013.
Looking ahead, foreign investments are likely to make a comeback this year. On a global level, the market share of foreign players slipped slightly, from 16.7 per cent to 16.3 per cent as domestic players were slightly more active last year.
Cross-border investment rose 17 per cent to 39 per cent of the market in EMEA; a significant chunk of this activity was provided by the Malaysian government-linked pension fund's acquisitions in London. In Asia and the Americas, it fell by 9.1 per cent and 4.7 per cent respectively, and accounted for only 10 per cent of trading.
This, however, underplays the role of foreign capital, which is expected to play a larger role this year. Mr Stinson said: "2013 will see investors embrace currencies which are expected to maintain value over time such as the renminbi, the Singapore dollar and the won. China, Singapore and Korea will enjoy more focus from international investors this year."
That being said, while the proportion of local to foreign investors in Singapore - which now stands at about 80 to 20 - could possibly change, the shift is unlikely to be dramatic, said Sigrid Zialcita, managing director for C&W's research team in the Asia-Pacific.
"As a foreign investor, you don't only look at yield or capital values. Currency is also important, and I think the strength of the Singapore dollar will be one of the appealing factors for an investor," she said. "We could see a gradual increase of 5-10 per cent (in foreign investors) over time."
All sectors within the Asia-Pacific are expected to perform well in the coming year. "In the office market, global banks will follow the regional banks in their expansion plans, which will fuel office demand in the major gateway markets of Tokyo, Shanghai, Hong Kong, Singapore and Sydney," said the report. "This sector will demonstrate positive steady growth rather than the spikes seen previously in markets such as Hong Kong and Singapore."
Mr Stinson said: "Retail will thrive, based on stronger GDP growth this year and we will start to see much more significant activity in light industrial and logistics as global trends in e-retailing start to gain further traction across the region this year."
Overall investment in the Asia-Pacific came to US$437.6 billion last year, an increase of 3.7 per cent over the year before. Foreign investment accounted for 10.9 per cent of the total, compared with 12.4 per cent in 2011.
In terms of investment targets, Singapore appears in 10th place on the global list of countries; on a city basis, the Asia-Pacific produced five cities in the Top 20 - Tokyo, Hong Kong, Singapore, Sydney and Seoul. Singapore was 13th globally, but third in the Asia-Pacific behind Tokyo and Hong Kong.
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