S'pore, HK property markets seen as highly attractive

[mr funny]

http://www.businesstimes.com.sg/sub/...51940,00.html?

Published December 7, 2010

S'pore, HK property markets seen as highly attractive

However, expected returns from their properties are not the best in Asia

By EMILYN YAP


SINGAPORE and Hong Kong are the most attractive markets for property investment in Asia, said Pacific Star Group.

The real estate investment house ranked 11 Asian markets based on a wide range of factors such as economic outlook, projected property vacancy rates, expected total returns, socio-political stability and ease of doing business, and found that Singapore and Hong Kong had the highest aggregate scores.

Beijing, Shanghai, Tokyo and Seoul were some of the next most attractive markets; Ho Chi Minh City was among the markets ranked in the last tier.

Singapore and Hong Kong came out on top for having strong macroeconomic fundamentals, even though expected returns from their properties were not the best in Asia.

For instance, Pacific Star foresees office properties in Singapore and Hong Kong generating a 'single digit' total return in the next 12 months.

This is lower than what other markets may yield - the total return from offices in Beijing or Tokyo could be in the 'low teens', while that from offices in Bangkok or Ho Chi Minh City could be in the 'mid teens'.

'Less attractive markets may present more opportunities to acquire mispriced assets, hence potentially higher total returns, while excessive competition in attractive markets could translate into potentially lower total returns,' Pacific Star explained.

'Ultimately, expected total returns may need adjustments according to perceived risks and the associated premiums required,' it said.

For the residential sector, Pacific Star expects the total return in Singapore and Hong Kong to be in the 'low teens'.

Investors around the world, particularly the wealthy from China and India, favour the two cities, it said.

But in other cities such as Delhi and Ho Chi Minh City, the total return from residential property could exceed 20 per cent.

In Vietnam, rising aspirations of the young population and further development of the home loans market could spur residential demand, Pacific Star said.

In a separate report last month, property consultancy DTZ rated Singapore as a more attractive property investment destination than Hong Kong.

It compared expected returns with required returns, and found that offices in Singapore were 16 per cent underpriced in the third quarter whereas those in Hong Kong were overvalued by 7 per cent.

[mr funny]

http://www.businesstimes.com.sg/sub/...51940,00.html?

Published December 7, 2010

S'pore ranks top for property investments

Survey respondents cite strong growth, brisk financial sector


(HONG KONG) Singapore and Shanghai rank top among Asian cities as the best real estate investment destinations, while Osaka and Manila are seen as the least ideal, an industry survey showed yesterday.

Singapore topped the rankings on the country's strong economic growth and brisk activity in the financial and high-tech industries, according to the survey which was jointly published by the global non-profit Urban Land Institute and PricewaterhouseCoopers.

Shanghai, Mumbai and Hong Kong were the next favourites, according to the study, which is based on the responses of more than 280 property professionals, including investors, developers, property company executives and brokers.

Shanghai dropped to second, from first in the previous annual survey, as the city saw sharp increases in property prices, damping some investor interest.

Even though the survey was carried out before Hong Kong announced its harshest tightening measures to cool its red-hot residential market a few weeks ago, it would not have affected the final standings, executives who were involved in the survey said.

'It's a concern, and certainly affects residential developers, but I don't think it will change the rankings,' Stephen Blank, senior fellow at the Urban Land Institute, told Reuters after a news conference. 'Residential doesn't drive the market.' he added.

Mr Blank said that it was possible that Asian governments would unveil more policies to cool their markets, but the strength of the economies would be the fundamental driver for investment decisions, especially in the commercial real estate sector.

'There is a great feeling of uncertainty because it is very hard to know what the potential changes in regulations are going to be,' he said. 'Regulations come and go. In Asia, governments turn things on and turn things off very quickly.'

Based on the survey that looked at 20 Asian cities, investors are least keen on investing in Bangkok, Auckland, Osaka and Manila due to factors such as office space oversupply and stagnant commercial rents. -- Reuters