Global expansion trend to continue among Singapore property investors
GIC along with Singapore real estate investment trusts (REITs) emerge as the top outbound investors.
In search for better yields, Singapore real estate investors are expected to continue expanding their global footprint, with GIC leading the pack, reported The Business Times (BT).
“Despite the challenging climate, there has been continued improvement in optimism in Q4 2020,” said Greg Hyland, Head of Capital Markets for Asia Pacific at CBRE, as quoted by BT.
“Driven by abundant liquidity and low interest rates, we have seen investor sentiment and deal flow improving, and this is expected to continue into 2021.”
Aside from better yields, the hunt for overseas properties is also driven by diversification motives. Hyland also expects the rollout of COVID-19 vaccine to play a role in investor confidence to go overseas.
For private investors and developers, diversification moves are often driven by acquiring well-located freehold assets offering stable income as well as long-term potential such as under-utilised gross floor area and large land holdings, noted Kate Low, Director, International Capital – Australia, JLL.
“For larger Singapore institutional investors, cross-border transactions are strategic opportunities to access scale and deploy capital efficiently, while also extending partnerships with reputable local managers to facilitate future growth,” she said as quoted by BT.
GIC along with Singapore real estate investment trusts (REITs) emerge as the top outbound investors.
In fact, GIC showed no sign of slowing down even during the holiday season, entering into an 80:20 joint venture with ESR Cayman to develop and acquire logistic and industrial assets in India.
On 18 December, GIC teamed up with global real estate investment firm Kennedy Wilson to acquire and manage urban logistics assets within the UK, with potential to expand into Spain and Ireland.
China continues to be the top destination for Singapore investors. GIC, which has been investing in China for more than two decades, acquired LG Twin Towers in Beijing for more than RMB8 billion (S$1.6 billion) from South Korean conglomerate LG Group.
CapitaLand Retail China Trust also revealed last month that it was looking to acquire interests in five business park assets in Xian, Suzhou and Hangzhou as well as the remaining 49% interest in the Rock Square mall.
Year to 18 December, Singapore outbound capital flows into overseas real estate hit US$15.3 billion (S$20.33 billion) compared with US$23.7 billion (S$31.49 billion) for the entire 2019, said Real Capital Analytics.
China took the lion’s share at US$4.5 billion (S$5.98 billion), followed by Australia and the US with US$2.7 billion (S$3.59 billion) and US$2.2 billion (S$2.92 billion), respectively.
“Resilient pricing and strong leasing momentum are driving Singapore capital to invest in mainland China,” said Hyland.
In Australia, Singapore investors were the top source of offshore capital within the country’s commercial real estate market.
“Singaporean investment into Australian commercial real estate during 2020 is tracking at around A$3.7 billion (S$3.74 billion), with the potential to grow amid a highly active period in the Australian market as the year draws to a close,” said John Sears, Head of Research for Australia and New Zealand at Cushman & Wakefield, as quoted by BT.
“Inbound investment from Singapore has eclipsed all other sources of offshore capital invested into Australian commercial real estate assets combined, and is nearly four times the value of investment from China that took out the number two spot,” he added.
Despite the travel restrictions, investment from Singapore significantly increased in 2H 2020 with the acquisition of over A$2.5 billion (S$2.52 billion) in industrial, office, hotel and retail assets, said Mark Hansen, International Director of capital markets for Australia and New Zealand at Cushman & Wakefield.
“The strength of activity in the final quarter in particular is likely buoyed by investors’ growing confidence in the containment of Covid-19 in Australia and reopening of the local economy,” he said as quoted by BT.
GIC and Singapore REITs once again led some of the landmark deals for the year.
GIC secured an interest in 222 Exhibition Street and Rialto Towers Melbourne for a total amount of A$850 million (S$858 million), while Keppel REIT and Ascendas REIT sealed over A$800 million (S$807 million) in transactions, said Hansen.
Keppel REIT acquired Pinnacle Office Park in September for A$306 million (S$308.92 million), while Ascendas REIT announced this month that it has acquired 1-5 Thomas Holt Drive for A$289 million (S$291.76 million).
Source: 29 Dec 2020, CommercialGuru