June 24, 2009
Singapore real estate 'not hot' for investors
Institutions and fund managers prefer China, Japan, Australia: Survey
By Joyce Teo
SINGAPORE no longer appears on the radar screen of most non-listed institutional investors and fund managers, according to the latest survey by Asian Real Estate Association (Area).
This year's hottest picks are China, Australia and Japan, said its Investment Intentions Asia Survey 2009.
The online survey of 73 organisations active in the Asian non-listed real estate funds market found that less than 20 per cent of fund managers and just 10 per cent of investors chose Singapore as their preferred investment location.
China is the most appealing location in terms of Asian performance prospects - it is the choice of 90 per cent of investors and 81 per cent of fund managers.
Japan was the top fund choice for fund of funds managers, firms that hold a portfolio of various investment funds, with 88 per cent of them opting for the country.
Australia, a new entrant, was also a firm favourite.
'With the exception of China, investors generally appear to have a lower regard than fund of funds managers or fund managers on the prospect of other Asian markets delivering target performances,' said the survey.
This year, Singapore did not figure at all in respondents' preferred locations and sectors in Asia.
In last year's survey, the Singapore office market was ranked seventh on
the list of respondents' preferred locations and sectors in Asia - though fund of funds managers were already not keen.
The number of institutions interested in Singapore has certainly diminished due to the downturn, said Mr Craig Ward, director of regional capital markets at Savills Singapore.
'There are still some institutions keen on the Singapore office market, but pricing has not reached an equilibrium.'
According to the survey, investors this year are most keen on the residential sector in China, followed by its retail market.
Fund of funds managers, however, prefer the Australian and the Japanese office sectors.
About 60 per cent of the respondents believe Singapore to be most hit by the global downturn, while just 20 per cent of them thought Hong Kong and Australia to be worst hit by the slump.
'Singapore is one of the most open economies in the world, so it is more than averagely affected by the downturn,' said Mr Robert Lie, co-director of Area's executive committee.
But it is an attractive mature market over the medium term, he added.
'A lot of investors are cautious. Basically, indicated prices have to correct,' said Mr Lie, who is also managing director of Redevco Asia.
Asia is the second home market of Redevco, which owns one of the largest retail real estate portfolios in Europe.