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Singapore is the favourite among Asian investors: Global Investor Outlook for 2016

By Tan Chee Yuen

/ Colliers, The Edge Property |

December 23, 2015 12:02 PM SGT

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According to Collier’s Global Investor Outlook for 2016, 48% of the Asia-Pacific investors surveyed are optimistic the growth in the investment volume of the region in 2016. Among the Asian investors, 41% of them favour Singapore, followed by Tokyo at 38% and Sydney at 31%.

Investment sales across all asset classes in Asia amounted to USD40.2 billion in the first three quarters of 2015, an increase from USD37.1 billion received in 2014 over the same period. Of the Asia-based respondents, 91 per cent of the real estate investors revealed intention to invest in the Asia Pacific region in the next 12 months. CBD office segment is the favourite among Asian investors, with 62% of respondents intending to target this sector within the next 12 months.

Mr Terence Tang, Colliers' managing director of capital markets and investment services for Asia believes that investment volumes in Asia Pacific for 2016 is set to outperform 2015.

Majority of Asia investors, or 91% of them, are likely to use debt to leverage their exposure in future investment decisions, of which, 85% indicated banks as their primary source of financing. In comparison, only 71% surveyed last year were likely to use debt as a leverage tool. A Singapore-based property developer revealed that they are likely to use debt in China in the next 12 months as the economy slows and sellers are more likely to trim prices.

According to the survey, 56% of Asian investors intend to expand their real estate portfolio over the next 12 months, as compared to 74% last year. Many investors remain cautious as China’s economic slowdown has translated into muted activity in the China property sector despite relaxation of legislation.

“While the equities market volatility has led to a more cautious approach in China, we do not think that there will be any significant drop in real estate investment activities; that is, unless the country’s economy suffers a drastic downturn, which I believe is unlikely. We anticipate yield improvement in some Asian Markets and the lower cost of debt in China will continue to support the return of capital into the Asian real estate markets,” adds Tang.

The number of Asian investors who are willing to take more risks in the next 12 months has declined to 33% from last year’s 58%, owing to investors’ stance to wait for a clearer economic direction.

Japan is a primary target for 59% of offshore investors with an Asia-Pacific focus, followed by Australia at 53%. Singapore is ranked fifth, attracting 30% interest from the investors.

Overseas investors’ preferred cities in Asia-Pacific in the next 12 months are Tokyo (33%) and Sydney (29%).

The Global Investor Outlook for 2016 is a survey conducted by Colliers with over 600 investors across the risk spectrum from the Americas, EMEA and the Asia Pacific regions. These investors include private equity, property companies, REITs, funds, institutions and sovereign wealth funds. The respondents collectively represent real estate holdings with total assets under management of around $1.5 trillion.

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