Overseas commercial and industrial assets, data centres, student housing on radar of Singapore investors: CBRE

Singapore

SINGAPORE investors' interest in commercial and industrial assets overseas is expected to remain strong, with the export of capital to continue this year amid tight yields in the domestic market, according to CBRE.

Aside from the commercial and industrial sectors, CBRE is also seeing "interest in alternative sectors such as data centres and student housing", said Yvonne Siew, CBRE Asia Pacific executive director of global capital markets.

"Driven by limited opportunities and compressed yields in the domestic market, Singapore investors will continue to seek enhanced yields offshore to diversify their portfolios and achieve more sustainable growth. They will continue to hunt for more attractive yields, especially in core income-producing assets," she said.

This comes as Singapore replaced China as the biggest Asian investor in global property markets last year, accounting for 36 per cent - or US$18 billion - of Asia-to-global capital flows, a Colliers report showed. This was up 3 per cent from US$17.4 billion in 2017.

Major transactions by Singapore-based investors last year include the 12.8 billion yuan (S$2.58 billion) acquisition of Shanghai's tallest twin towers by a joint venture between CapitaLand and GIC as well as Ho Bee Land's £650 million (S$1.15 billion) acquisition of Grade A office building, Ropemaker Place in London.

Flows from China more than halved from US$27.6 billion in 2017 to US$11.5 billion in 2018 on the back of "continuing government restrictions as well as economic factors". South Korea was the third largest Asian investor with US$7.6 billion.

The total tally was US$50.5 billion, lower than the US$73 billion chalked up in 2017.

The United States remained the preferred pick for Asian investors, accounting for about a third of total Asia-to-global capital flows. On the whole, Asian investors honed in on office and industrial assets, as these two sectors comprised 45 per cent and 29 per cent of the total tally, the Colliers report highlighted.

At the same time, Colliers noted a growing interest in other sectors, such as residential, logistics and hotel assets, as well as land development sites. This year, Colliers projects that total Asia-to-global investments will climb to about US$61 billion this year, although uncertainties around Brexit could have an impact, given that London remains the choice location for Asian capital in Europe.

According to CBRE, the top three markets where Singapore-based investors chose to park their capital last year were the United States (US$6.5 billion), China (US$4.3 billion) and the United Kingdom (US$3.1 billion).

The most popular sector last year was industrial & logistics (U$7.7 billion), followed by office assets (US$6.9 billion), and residential or multi-family properties (US$1.5 billion).

"Capital flows out of Singapore have held rather steady in the last few years," said Shaowei Toh, head of research and strategy (APAC) for UBS Asset Management. "Not surprisingly, China and US are among the preferred destinations, given the size of the economies and ample liquidity."

He added: "Institutional capital continues to be focused on the commercial real estate segment, with developers and operators still having the appetite for development deals, while long-term investors stay close to the core space."

Mr Toh also noted that trends such as rising e-commerce penetration, supply chain efficiency and labour shortages is supporting demand for modern industrial real estate within the Asia-Pacific, especially in markets such as China, Japan and Australia.