Singapore Surpasses US as Biggest Property Investor In Asia Pacific
ASIA PACIFIC – Data from Knight Frank showed that Singapore was the top real estate investor in the region during the third quarter, overtaking the United States for the first time on record, reported The Edge on Wednesday evening (1 November, SGT).
Year-to-date, entities based in the city-state deployed nearly US$8.5 billion worth of capital into Asia Pacific properties in Q3 2023, surpassing investment from US companies into the region by almost 50 percent over the same period.
Neil Brookes, Global Head of capital markets at Knight Frank, disclosed that many private offices and government-linked companies (GLCs) in Singapore have substantial equity ready to be deployed. And the wider market upheaval arising from the higher borrowing costs has created opportunities for all equity investors to shift capital, while many other institutional investors are staying on the sidelines.
“The strength of the Singapore dollar is also driving large institutions such as the city-state’s Singaporean sovereign wealth fund GIC and other GLCs to pursue opportunities in markets such as Japan, China, South Korea, and Australia.”
“Notably, GIC has consistently increased its allocation to the real estate asset class, with investments in the US now accounting for approximately 22.4 percent of the total inbound investment volume from Singapore,” Brookes explained.
However, the commercial property market in Asia Pacific recorded limited movement during the third quarter, with investment activity plunging 53.4 percent on an annual basis. Knight Frank said the noticeable pullback from domestic and international investors demonstrates their reluctance to invest in real estate amidst the current high-interest rate environment, in which yield spreads have narrowed to a point that certain markets are seeing negative risk premiums.
Because of the above issues, property investors in the region have shifted their sights on new economy assets, especially data centres and industrial properties. On the other hand, purchase of office buildings has taken a backseat, underscoring the weak return-to-office movement and the currently challenging business sentiment.
“For industrial properties, the combination of limited supply of institutional-grade assets and sustained long-term demand from e-commerce, life science and technology are fuelling investment interest. Similarly, the data centre sector is increasingly viewed as a stable, long-term investment opportunity,” added Knight Frank’s Research Head for Asia Pacific, Christine Li.