Singapore still hot for property investment: DTZ

Published 27 May 2011
The Business Times
By Kalpana Rashiwala

Capital values expected to be re-priced at faster pace this year

PROSPECTS for investing in Singapore’s office, retail and industrial property markets have been categorised as ‘hot’ as at the first quarter of this year in DTZ’s latest Money into Property report.

Singapore still hot for property investment: DTZ‘This is similar to the Q4 2010 findings, as we expect continued price and rental increases based on Singapore’s projected economic growth in 2011 and over the next few years,’ said DTZ’s head of South East Asia research Chua Chor Hoon.

‘The Singapore office market is ranked among the top five in the ‘hot’ category among the Asia Pacific cities covered in this study. Capital values are expected to re-price at a faster rate (in 2011) compared with 2010 with growing interest from institutional investors,’ she added.

The latest Q1 2011 DTZ Fair Value Index (FVI) score – an indicator of investment opportunities in the office, retail and industrial property markets – for Asia Pacific stood at 65, well above the global score of 50.

The more the number of hot markets in a region, the higher the index will be, with 100 being the maximum score.

DTZ noted that markets in the Asia Pacific are experiencing increased occupier demand from expanding domestic companies and multi-nationals locating to the region.

The Asia Pacific also achieved a strong increase in property investment volumes last year to US$158 billion, double the US$73 billion in 2009 and making the region the leading market (46 per cent of global transactions). Investment volume in the Asia Pacific region also overtook Europe for the first time. The global investment volume increased 76 per cent from US$194 billion in 2009 to US$342 billion last year.

DTZ is predicting a 9 per cent rise in global investment transaction volumes this year, largely on the back of continued recovery in Europe. However, the Asia Pacific is expected to see volumes flat lining.

‘We expect that the government restrictions (on property transactions) in China will begin to take effect in 2011 … and (there is) expected drop-off in activity in Japan following the earthquake,’ said the report.

Ms Chua also addressed questions on Singapore’s residential property market at DTZ’s Money into Property Asia Pacific 2011 seminar yesterday. Quizzed on likely changes in Singapore’s property market following the appointment of a new National Development Minister, she said: ‘I think they will be reviewing all the Housing & Development Board policies; it’s just a question of which ones will be changed and to what extent.’

She also noted the recovery in developers’ private home sales volumes in March and April and high sales in the secondary market and argued that the new residential supply being pumped into the market could lead to a glut of completed homes in a few years. This would dampen prices and rentals – especially if interest rates rise and demand falls particularly if there is a slowdown in intake of new immigrants to Singapore.

Ms Chua reckons potential property cooling measures could include a further reduction in loan-to-value limit and an increase in the minimum cash downpayment on private home purchases by investors.

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