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SG Wave of capital inflows into Asian property

Property Here - Thursday, July 11, 2013

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Although the region is only recovering at a gradual pace, major buyer groups remain confident about acquiring properties in the Asian market, noted a report from LaSalle Investment Management.
 
“There is a broad spectrum of capital targeting Asian real estate, with an ongoing structural shift by many Asian institutions into the sector, such as the region’s pension funds and sovereign wealth funds. In addition, listed real estate has benefited from a variety of new equity raisings and private equity continues to see strong inflows and active fund-raising,” said Paul Guest, Head of Research & Strategy for the Asia Pacific at LaSalle.
 
As buyers target quality properties, prices are also rising. As a result, investors are “gradually moving up the risk curve in terms of asset quality and market selection”. This trend has spread across many sectors and locations, he added.
 
In Singapore, ongoing recovery of the office market “supports appealing development and repositioning options in the main central districts”. 
 
With short supply, Singapore's student accommodation sector becomes an attractive asset class. Suburban retail and higher specification logistics are still the most lucrative segments although difficult to penetrate.  
 
“As ever, Asia displays a wide range of cyclical dynamics in terms of property supply and demand. Most office and retail markets are in the early stages of rental recovery, with the over-supply of offices in Singapore and Seoul gradually being absorbed, albeit by sluggish leasing activity. Residential markets in China, Hong Kong and Singapore remain subject to policy risk, with government intervention having a bigger impact on prices than underlying fundamentals,” the report said. 
 
Overall, the logistics sector is the most favourable market due to shortage of good quality stock. 



Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@allproperty.com.sg