STI: Property sector outlook 'uncertain'

May 20, 2009

Property sector outlook 'uncertain'

DESPITE the recent uptick in property interest in some countries, the outlook for the sector remains uncertain, an Asian real estate conference heard yesterday.

 

Speaking at Cityscape Asia 2009, Mr Stuart Labrooy, chief executive of Malaysia-based Axis Reit Management, said the full effects of the credit crisis 'have not yet reached Asia'.

 

Property valuations in Asia, he said, will probably bottom out in the second half of the year, but there was no telling when the recovery will come.

 

Also speaking during a panel discussion on the impact of the downturn on Asian real estate, Mr Blake Olafson, Arcapita's head of Asia real estate group, said the industry was now focusing on the basics.

 

He added: 'If you're a pension fund manager, that's what you'll do - not suddenly try to become a real estate developer in some Tier 3 city in China. There's a greater sense of realism in the market, and a return to looking at fundamental cash flows, not just internal rate of return deals.'

 

Invista Real Estate chief executive Duncan Owen said Singapore, Hong Kong and Tokyo are attractive over the medium to long term as they have 'quite large commercial markets', sustainable economies and increasing market transparency.

 

The fact that the Singapore market is now badly affected like other markets is an opportunity for them, he added.

 

Invista, Britain's largest-listed property fund manager, recently bought the Asian real estate business of Babcock & Brown, which gave it offices in Singapore and Hong Kong.

 

In his keynote address, Singapore's Urban Redevelopment Authority group director (strategic planning) Richard Hoo acknowledged that the economic climate was now more challenging than during last year's Cityscape Asia.

 

Today's focus, he said, was on 'enhancing our readiness' when the economy improves.

 

Yesterday's Cityscape Asia exhibition was quieter than previous events. Just 40 exhibitors have set up booths this year, and the organiser is expecting more than 3,000 people to visit over its three-day period ending tomorrow.

 

Last year, it attracted 5,520 real estate professionals and 70 exhibitors.

 

The 2007 event - inaugurated by National Development Minister Mah Bow Tan - drew 4,689 participants and 125 exhibitors.