Singapore institutional investors tap opportunities in Adelaide and student housing sector in the UK

SINGAPORE (EDGEPROP) - Last year, investors were gearing up for higher interest rates and anticipating a recession. Today, not only is the current US economic cycle double the average length of the previous 33 cycles, investment yields are also largely compressed, according to data from OECD and Knight Frank. Similarly, the UK is nine years into its recovery from the global financial crisis while Australia is more than 27 years into its economic cycle.
While many mature economies are experiencing elongated cycles, their long-term average growth rates are moderating. Typically, local developers and Reits turn to key cities such as London, Sydney and Melbourne for accretive assets. Given the current macroeconomic environment, they are now searching for yield in secondary cities and suburban areas, observes Emily Fell, Knight Frank’s director of capital markets.
Emily Fell (Photo: Samuel Isaac Chua/EdgeProp Singapore)
“We’re seeing Singaporean investors being extremely active whether they are institutions or private funds or listed developers. More and more, their focus is on suburban locations and not just the CBD,” she states. An investment destination that has been gaining favour among investors is Adelaide in South Australia.

Hunting for yield in Adelaide

In March, Adelaide received A$551 million in funding from the government to turn the city into a “centre of innovation excellence”. To attract companies and drive innovation, South Australia has also invested some A$7.6 million to roll out new fibre optic cables for 29 innovation precincts.
Prior to these initiatives, Elon Musk gave the city a boost when he introduced a new SpaceX rocket at a space conference in September 2017. Later that year, he built the world’s biggest lithium-ion battery to drive down local electricity prices.
With these developments, Soilbuild Business Space REIT acquired 25 Grenfell Street in Adelaide CBD in August for A$134.22 million. The freehold Grade-A office building has a site area of 21,183 sq ft and net lettable area (NLA) of 268,766 sq ft comprising 22 levels of office floors, and two levels of retail space.
Adelaide office stock by grade (Source: Knight Frank)