http://www.businesstimes.com.sg/real...d-see-approach

More property investors in Asia adopt wait-and-see approach

Transaction volumes fall 24% in Q3; Singapore's appeal 'wanes but fundamentals still strong'

By Lynette Khoo

[email protected]@LynetteKhooBT

6 Dec


MORE real estate investors in Asia are sitting on the sidelines, with transaction volumes across the region falling 24 per cent year on year in the third quarter in contrast to significant increases in the United States and Europe.

The declines were particularly pronounced in Singapore, Hong Kong and China, which have seen a substantial level of investment capital flowing into other markets as their governments have implemented measures to curb surging property prices.

Singapore's appeal with real estate investors has waned, falling to ninth place from seventh previously, according to a report jointly published by the Urban Land Institute (ULI) and PwC.

While property prices here have held steady in general, both residential and commercial transactions have fallen significantly as both foreign and international investors turn to foreign markets to look for deals, the report says.

Yeow Chee Keong, real estate and hospitality leader at PwC Singapore, felt that it was not unexpected to see a decline in real estate investment sentiment here, given more attractive options in key Australian and Japanese cities. "However, the fundamentals of the sector in Singapore are still strong and attractive," he said.

Mr Yeow expects more opportunities for deals to arise in the commercial space next year, arising from the tight supply situation in the short term. "In the residential sector, what we hope to see is an increase in sustainable transactions beyond 2015 should there be a re-calibration of the cooling measures or of sellers' expectations of exit values."

The report surveyed the views of 385 real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants. Its findings were consistent with a mid-2014 poll conducted by Preqin, which showed that Asia-based investors were more inclined to pursue geographical diversification than their peers in the US and Europe.

In their report, ULI and PwC say that stiff competition for conventional assets in prime markets is continuing to boost the appeal of some niche property sectors, particularly logistics, although interest in other specialty sectors such as student and senior housing is waning.

Tokyo remains the most popular market for real estate investment and development over the next one year. Jakarta is ranked second as many investors expect strong growth in asset prices.

Raymond Chow, chairman at ULI North Asia and executive director of Hong Kong Land Limited, noted that Asia is flushed with liquidity and "a seemingly endless stream of money is now pointed at real estate assets across virtually all jurisdictions and asset classes".

"This is pushing up prices and further compressing yields," he said. "As a result, we are seeing fewer transactions, a growing shortage of investment-grade properties, a search for alternatives to core products, and a general pullback from assets in secondary locations. We can expect this to continue over the next several months."