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SG Asia Pacific cross-border activity up

Property Here - Tuesday, November 12, 2013

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Cross-border transactions involving properties in Asia Pacific increased in Q3 2013, both intra-regionally and from investors purchasing from outside the region, revealed a CBRE report.

The trend includes Asia-based private institutions and investors looking for opportunities to park capital abroad, as well as rising activity from pension funds and sovereign wealth funds from outside Asia Pacific. 

While there was more activity from foreign investors, the report noted that local investors still dominated in most markets as they were able to move faster considering their domestic advantage.

High-net-worth investors from Asia were specifically active in seeking large commercial assets in offshore markets, with deals including the acquisition of Singapore's Grand Park Hotel by a Chinese family for US$877 million (S$1.095 billion). Earlier this year, that same family purchased two office properties in Australia.

Such investors are one of the most significant contributors to cross-border flows. For the last quarter of this year, overseas investment from the segment reached US$631 million (S$788 million), or up 69 percent quarter-on-quarter and 571 percent year-on-year.

Greg Penn, Managing Director, Capital Markets, Asia, said: “High-net-worth investors are becoming more positive about the market, but increasingly they see value and returns coming from direct investments like real estate. As a consequence they are diversifying away from their traditional equity and bond holdings to increase their exposure to real estate.”

As for overall market growth, the volume of commercial real estate transactions in Asia Pacific rose 10.8 percent to US$21.6 billion (S$27 billion) in Q3 2013 from US$19.2 billion (S$24 billion) in the previous quarter. The quarter also saw market sentiment diverge with upbeat markets led by China, Japan and Australia. These markets recorded steady buying activity from local groups and sustained interest from foreign investors. 

Meanwhile, Singapore and Hong Kong witnessed weaker activity due mainly to government cooling measures – “although transaction volumes in Singapore did increase due to a few isolated big deals – whilst sentiment and activity weakened in Indonesia, Malaysia and Thailand”, the report said.