Singapore second most preferred city in Apac for cross-border property investments in 2023: CBRE survey
SINGAPORE is now the second most preferred destination for cross-border real estate investment in the Asia-Pacific, up from third place last year.
It continues to be a focus for core investors due to its strong market fundamentals, CBRE’s latest Asia-Pacific Investor Intentions Survey showed.
Tokyo retained the top spot for the fourth consecutive year. Meanwhile, Ho Chi Minh City came in third place for the first time, from ninth place in 2022, as its investors adopted an opportunistic strategy.
CBRE expects core investors to focus on Japan, Singapore and Australia this year.
The survey, which covers all asset classes, found that 31 per cent of investors will take advantage of current market conditions this year by targetting distressed assets and non-performing loans.
China’s reopening and more reasonable valuations have made Hong Kong attractive to investors, placing the city in the top five for the first time since 2020.
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Mumbai and Shanghai were ranked seventh and eighth respectively, and continue to be a focus for long-term investors who plan to add to their real estate exposure in two of the biggest emerging economies globally.
Hanoi entered the top 10 rankings this year, placing ninth as Vietnam continues to benefit from being a China-plus One destination, CBRE said. End-users, developers and investors are all eyeing opportunities in the Vietnam market.
Despite solid fundamentals, Seoul slipped to 10th place from seventh in the preceding year due to soaring cost of finance and tight capitalisation rates.
Sydney and Melbourne retained their fourth and sixth rankings respectively. With cap rates projected to expand, investors eyeing these two markets are paying closer attention to opportunities across all sectors.
Opportunistic strategies are predicted to gain momentum this year, the consultancy said, as investors plan to capitalise on price dislocation and seek distressed opportunities. These investors are also eager to identify potential opportunities between the public and private markets.
Greg Hyland, head of capital markets, Asia-Pacific for CBRE, expects investment activity to accelerate in the second half of the year.
“Despite healthy levels of fundraising, most investors are adopting a cautious approach as they look for signs of yield expansion and the interest rate tightening cycle to stabilise,” he noted.
The industrial and logistics sector was once again most preferred by investors as it continues to enjoy tailwinds from structural changes such as e-commerce growth and robust market fundamentals. Office and residential were the next preferred sectors.
CBRE’s survey found that more than 60 per cent of investors surveyed expect to find discounts in retail and Grade A offices in 2023. Despite logistics being the most preferred asset class, only 11 per cent are willing to bid above the asking price this year, compared to 35 per cent in 2022.
Only 5 per cent of investors plan to invest in alternative sectors. Healthcare-related properties, including life sciences and medical offices, are the most preferred, overtaking data centres for the first time.
Around 60 per cent of investors intend to use environmental, social and governance (ESG) criteria in making investment decisions. The remaining 40 per cent plan to delay ESG adoption due to increased costs and current economic conditions.
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