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SG Aviva predicts positive growth for Asia Pacific property

Property Here - Thursday, May 30, 2013

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By Romesh Navaratnarajah:

While the Asia Pacific region will likely see an economic recovery this year, investors need to be cautious over possible external shocks from Europe and the US, according to global asset management firm Aviva Investors.

“For 2013, investors can expect an improvement in real estate returns in Asia Pacific driven by improving occupier demand and strong interest from domestic and APAC regional investors. However, we prefer leasing risk to pricing risk in selected markets at this point of the cycle,” said Elysia Tse, SVP of Strategy and Research for Asia Pacific Real Estate at Aviva Investors.

Singapore’s suburban retail sector will remain a top player after it achieved 99 percent occupancy rates in 2012 and outperformed other commercial property sectors.

“With increasing online retailing in Australia, Japan and China, there are attractive opportunities in the logistics sector across the region,” added Tse.

Aviva expects the region’s office sector to provide the biggest returns over the next three years and industrial in the next five years. Retail necessities will also flourish in Singapore, Japan and Australia.

In Japan, rents and values continue to rise following the aggressive quantitative easing programme by the government.

Meanwhile, US core prime assets will stand out among the mature economies with demand from first- and second-tier cities. This will likely spread to better-quality secondary assets and “could be a turning point for UK real estate with good-quality secondary assets attracting investor interest”.

“These are typically well-located assets which can be improved by initiatives such as changes to tenancy agreements and are likely to benefit from growing investor demand for relatively secure sources of yields.”

Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email