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SG Rising capital flows into property: report

Property Here - Tuesday, April 02, 2013

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By Shabnam Muzammil:

Despite low projections for the global economy and property market, new capital available for direct real estate investment rose three percent to US$320 billion (S$397.5 billion) compared to US$311 billion (S$386.3 billion) six months ago, said a DTZ report.

Growth in available capital was seen across all regions except Europe, the Middle East and Africa (EMEA), which dipped one percent to US$114 billion (S$141.6 billion).

On the other hand, the Asia Pacific saw a three percent increase in available capital to US$82 billion (S$101.8 billion), while the Americas achieved eight percent growth to US$124 billion (S$154 billion).

The report also noted that available capital is well-diversified across all property types.

“Just over one-fifth of capital is aimed at single-sector funds. These trends are virtually unchanged on previous estimates as funds continue to favour a diversified strategy across property type.”

“Retail remains the favoured choice for funds adopting a single property type strategy, albeit their share has slipped to 26 percent. Residential is the next favoured sector representing around one fifth of capital. Over half of those funds targeting the residential sector are focussed on the Americas region, with just under a quarter targeting Europe (mostly Germany and the Nordics).”

For funds looking at a single property type, residential accounts for a third of new planned raising while 26 percent and 16 percent target office and retail sectors respectively. Less than five percent would invest in the industrial market.

“The reduction in demand for these property types is likely to reflect a mix of concerns including the outlook for these markets, particularly retail, and the ability for funds to deploy capital given the range of funds already available,” added the report.

 

Shabnam Muzammil, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email shabnam@allproperty.com.sg