Asia Pacific Property Investment

Singapore Defy Slowdown In Asia Pacific Property Investment

SINGAPORE – Data from MSCI showed that the city-state was the only country in Asia Pacific to see a record-high level of real estate investment in H1 2022, reported The Business Times on Wednesday afternoon (10 August, SGT).

While property investment in the region dropped 24 percent year-on-year to US$45.1 billion in Q2, investment volume in Singapore surged 74 percent to US$5.6 billion during the three-month period, or the highest tally ever for one quarter. In the first six months, total transaction value jumped 53 percent in the city-state to US$7.8 billion on an annual basis.

Singapore’s stellar performance was primarily driven by global investors, with office space being the most in-demand asset category.

“While the broader regional slowdown has largely been attributable to fall-off in smaller deals, Singapore’s institutionally-dominated market has shrugged off the macroeconomic headwinds,” said Benjamin Chow, Head of Asia real assets research at MSCI.

Meanwhile, the decline in property investment across Asia Pacific is due to the rising interest rates, which has impacted deal activity in some core markets.

“Rising borrowing costs have squeezed out smaller buyers, as evidenced by the fact that deals under US$50 million fell the most across all measures of activity,” explained Chow.

On the other hand, big global institutions and cross-border players, which were relatively less affected by the higher interest rate, remained much more active in Q2 2022.

Meanwhile, China and Hong Kong registered the largest drop in real estate investment, as the listed financial sector was impacted by lockdowns and financial distress.

In China, investment volume contracted 42 percent year-on-year to US$9 billion in the second quarter and fell 26 percent to US$19.9 billion in H1 2022. As for Hong Kong, investment volume there decreased 50 percent to US$2.3 billion in Q2, and decreased 25 percent to US$4.7 billion in the first half of the year.

By asset type, the largest loser in the region was the industrial sector, while the retail industry also disappointed. Investor focus has returned to the office sector, with the majority of the Asia Pacific’s largest investors piling into the asset class this year, noted David Green-Morgan, Head of real assets research at MSCI.

In fact, US$22.1 billion and US$42.1 billion worth of office properties across the region changed hands in Q2 2022 and H1 2022, respectively. These represent a 9 percent and 3 percent increase compared to the same period in 2021.

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