Asian investors are more upbeat about real estate investment, with 62 percent expecting the property market in Asia to improve over the next 12 months, according to the latest Colliers International Global Investment Sentiment Survey.
This reflects a higher level of confidence than in the previous year when only 38 percent of respondents in Asia felt that the property market would improve in the following year.
Despite the seemingly-restored confidence, investors are still being cautious given the slower-than-expected economic growth in Asia and the possible tightening of the US stimulus programme.
The survey revealed that 48 percent of the Asian respondents’ targeted internal rate of returns (IRRs) stood between 15 to 20 percent, while another 32 percent targeted IRRs at over 20 percent.
It also found that Asian property investors favour offices in core locations, followed by residential properties.
In terms of location, 50 percent invested in their local market, 41 percent within their region and nine percent outside of their region. Over the next 12 months, 42 percent of Asian respondents revealed that their main focus will be on China, followed by Singapore (21 percent), Japan (18 percent), India (18 percent), Hong Kong (16 percent) and South East Asia (13 percent).
At the same time, Singapore has been listed as the top city by Asian investors for the next 12 months, beating previous leader Shanghai which now holds third spot. Tokyo and Hong Kong ranked fourth and fifth, while new entry Mumbai grabbed second place.
Tang Wei Leng, Executive Director of Investment Services, Colliers Singapore, noted that the coming year “will see good opportunities to invest in Singapore government land sales, closed-end funds and listed developers”.
However, “investors will need to face the challenges, such as low yields, restrictions on bank financing and the limited number of acquisition opportunities”, she added.