Thursday, Dec 06, 2012
SINGAPORE - South-east Asian cities will lead real-estate investment opportunities next year, even as the entire Asia-Pacific region is expected to see steady economic growth and increasing property values.
Such cities dominated three out of the top five spots in a survey on investment and development prospects of 22 cities in the Asia-Pacific next year. The findings were released by the Urban Land Institute and PricewaterhouseCoopers (PwC) yesterday.
Specifically, investors were most bullish about the real-estate outlook for Jakarta. The Indonesian city saw a surprisingly large jump in the rankings, from 11th place in the same survey conducted last year to first position.
Investor confidence also remained highly positive for Singapore's outlook. It beat numerous cities to come in third, despite dropping from first position last year.
Kuala Lumpur, meanwhile, emerged fifth, up from 17th last year.
Bangkok also featured strongly, placing sixth, having moved up eight places, in the report titled Emerging Trends In Real Estate Asia Pacific 2013.
Commenting on the change in investment sentiments, Mr Choo Eng Beng, real-estate leader for PwC Singapore, noted that investors are more "adventurous" and are on the hunt for strategic opportunities and higher yields.
This is why they are looking more towards emerging South- east Asian cities, or revisiting often-overlooked capital cities, compared to more developed areas like Singapore, he said.
But this does not mean that capital will stop flowing into Singapore's real-estate market and that the Republic is on the losing end.
Investors realise that while they are not likely to get astronomical returns here, their money is safe, experts said.
"While opportunities and competition loom in these emerging cities, Singapore is clearly still performing well. It remains an attractive haven, offering stable yields, safe returns and pockets of growth opportunities," said Mr Choo.
Mr John Fitzgerald, executive director for ULA Asia Pacific, said that investors are certainly interested in Singapore, but are perhaps simply finding it hard to find the right opportunities, as the locals tend to get there first.
Mr Colin Galloway, principal author of the report, pointed out that there's always a steady stream of government land sales and a strong pipeline of new projects in Singapore, so investment opportunities are there.
As a financial hub, Singapore also generates ongoing demand for high-grade office space, although the market segment has recently run out of steam, with significant supply of new Grade-A office space drawing tenants away from existing buildings.
On Jakarta, Mr Galloway said that there has been a turnaround in the past couple of years. Interest rates and inflation are stable, the economy is growing steadily at about 6.5 per cent annually, and foreign direct investment is also increasing at a higher rate.
The city thus holds strong promise, although it is difficult to secure bank loans and find reliable local partners, he said.
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