Singapore Named As Top Market For Property Investment Prospects

Singapore Named As Top Market For Property Investment Prospects In Asia Pacific

SINGAPORE – The Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC) named Singapore, followed by Tokyo and Sydney as the leading markets for real estate investment prospects in Asia Pacific for next year, according to their latest forecast published on Business Wire on Thursday afternoon (24 November, SGT).

Based on the 17th edition of the Emerging Trends in Real Estate Asia Pacific Report, the three markets are also the cities most likely to see rental growth in 2023, adding that the “the top markets were characterised by deep liquidity and a flight-to-safety approach.”

In particular, Singapore has gained from the redirection of capital that might otherwise have been invested in properties located in Mainland China and Hong Kong due to the ongoing liquidity crisis in Mainland China’s property market and the persistent COVID-related curbs.

Despite the relaxation of COVID measures in Hong Kong, its status as the most expensive commercial and residential property market in the region has also made it vulnerable amidst the prevailing high-inflation recessionary environment.

As for Tokyo, it continues to see a near-zero interest rate environment, which results in lower borrowing costs and a more positive spread over the cost of debt.

“The persistence of fragmented market conditions has enabled Singapore and Tokyo to retain their top spots as the cities with the brightest investment prospects although the factors augmenting each city do markedly differ,” explained PwC’s property tax Leader for Asia Pacific, Stuart Porter.

Meanwhile, data from ULI and PwC showed that 3rd quarter property deal volume in Asia Pacific dropped 38 percent year-on-year to US$32.6 billion, the lowest Q3 tally in the region for around 10 years. Specifically, mainland China accounted for the largest drop with an annual decline of 23 percent.

“Rising interest rates and the slowing global economy are beginning to impact regional asset valuations and changing the way investors assess potential deals,” noted ULI Asia Pacific’s President David Faulkner.

“As a long-term inflation hedge, real estate will continue to draw capital, but the industry is also likely to undergo significant change over the coming years, due to the evolving economic environment and changes in the ways that people use the built environment,” he added.

Still, the report underscored that office properties remain as the largest asset class in Asia Pacific. Prime office space in business precincts are invariably in short supply and are constantly the targets of regional core funds competing to invest capital. In addition, the wide pricing gaps between buyers and sellers are expected to continue for some time.

The latest Emerging Trends in Real Estate Asia Pacific Report is based on a survey of 233 property professionals along with 101 interviews with developers, investors, lender brokers, and representatives from property companies.

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