En bloc, huge deals push S'pore up on list of most active markets in Asia-Pac
En bloc, huge deals push S'pore up on list of most active markets in Asia-Pac
Real Capital Analytics report also forecasts strength will continue with additional US$4.6b of deals in contract
August 8, 2017
CHAI HUNG YIN
SINGAPORE climbed to its highest position in five years on a list of most active big-ticket real estate market makers in the Asia-Pacific with US$5.8 billion worth of sales volume in the first half of 2017, data released by Real Capital Analytics (RCA) on Monday showed.
Several large deals, such as the S$2.2 billion acquisition of Jurong Point shopping mall and sales in the residential en bloc market, powered Singapore's ascent to the fourth position, behind Hong Kong, Tokyo and Shanghai. Singapore was ranked sixth on the list in 2016 and seventh in 2015.
Hong Kong surpassed Tokyo for the first time as the region's top investment market in the first six months, boosted by growth in Chinese capital flow into Hong Kong.
Sales volume for Hong Kong rose 5 per cent year on year to US$8.3 billion for H1 2017, while deal count at mid-year was almost twice that of a year ago.
Petra Blazkova, RCA's senior director of analytics for Asia-Pacific, said: "The Hong Kong market has reached a new peak in property pricing while attracting huge inflows of Chinese capital as well as demand from the territory's own robust investor base. There were six megadeals involving development sites in the first half, which highlights how scarcity of land in Hong Kong is driving the market."
RCA defines a megadeal as any transaction exceeding US$1 billion. RCA's Asia-Pacific Capital Trends report uses data based on office, retail, industrial, hotel, apartment and development site properties and portfolios US$10 million and greater unless otherwise stated.
Chinese investors have thus far invested US$9.5 billion into the Asia-Pacific's real estate - a 46 per cent rise year on year - with more than half of that amount going to Hong Kong.
Chinese investments into Japan, Singapore and South Korea also grew threefold in H1 2017 versus a year ago, despite news about changes to capital regulations.
Ms Blazkova said controls introduced by the Chinese authorities to keep money onshore in mainland China will have a ripple effect across the Asia-Pacific and beyond.
Tokyo, however, lost its position as the market leader for the first time since 2007. It saw a 33 per cent drop in investment in H1 as high prices and a shortage of suitable stock slowed investment activity.
"Investors have struggled to place capital in the city and activity migrated to secondary cities such as Yokohama and Osaka. Yokohama climbed to the seventh spot on the list, a record for this market," the report said.
Singapore's investment market activity is set to strengthen, with an additional US$4.6 billion of deals in contract, even as sales volume jumped 50 per cent in H1 2017.
Of the string of completed property deals in the Asia-Pacific, Jurong Point's acquisition by Mercatus Co-operative, an NTUC social enterprise, was the top transaction in H1 2017.
Outbound investments from Singapore to Japan surged 334 per cent year on year to US$3.3 billion in the second quarter of 2017, while capital flow to China rose 174 per cent to US$3 billion.
But capital flow from Singapore to Australia shrank by 34 per cent to US$2 billion, as activity in the Australian market slowed due to high pricing and a lack of available stock.
Said Ms Blazkova: "Record prices mean investors are content to sit out the market until cheaper buying opportunities arise, while owners are unwilling to sell assets at a perceived discount. The stand-off in the Australian market is unlikely to change any time soon and we can expect to see record high pricing with low transaction volumes to remain a feature going forward."
