Singapore tops cross-border commercial property investment in Asia Pacific: DTZ

Singapore dominates cross border investment in Asia Pacific, according to DTZ. It is also ranked third for cross border investment in North America.

Global investment activity in commercial property continues to grow with volumes in 1H2015 up 15% y-o-y to USD318bn (S$447bn). Strong demand for real estate is expected to drive global investment volumes to reach USD771bn (S$1,083bn) this year, a 22% increase from 2014.

Ong Choon Fah, Chief Executive of Southeast Asia, commented: “Singapore-based institutional investors have been exploring overseas for opportunities to earn higher returns and portfolio diversification. Additionally, Singapore’s stable currency helps investors lower the cost of investment especially in Asia Pacific.”

Only Tokyo and Seoul represent Asian markets in the leading 15 cities for attracting inter-regional investment. This reflects the low volume of inter-regional flows into Asia Pacific.

Only Sydney and Hong Kong from Asian markets made it to the top 15 most traded markets globally with USD8.2bn and USD5.5bn respectively.

In Asia Pacific, activity for the past 12 months dipped 7% y-o-y to USD90bn. Lack of suitable product and mismatch in expectations are impediments faced by the market for the past six months. In contrast, North America and Europe saw 12-month volumes rising 18% and 23% to USD311bn and USD274bn respectively.

Dr Dominic Brown, Head of Asia Pacific Research, said: “After a record year in 2014, when USD104bn was invested in Asia Pacific real estate, investment volumes in the first half of the year have slowed. In some markets this is due to lack of suitable product, which was evident in Q1 2015 in Australia. A mismatch between buyer and vendor expectations also exists in some markets around the region.”

Capital was predominantly sourced from North American and Chinese funds. Norwegian, Qatari and Taiwanese capital is also growing in strength.

DTZ expects Europe and North America to see strong growth in activity and record volumes in local currency terms. While a reversal in the first half weakness in Asia Pacific is expected, DTZ believes the upturn in volumes in the second half will not be sufficient to match the strong volume of activity in Q2 2014, thus leaving Asian volumes short of their 2014 record of USD104bn.