According to Woori Investment & Securities, the Korean National Pension fund has put nearly US$3 billion into real estate in the past six to nine months alone.

And it appears investors are favouring commercial properties over residential ones to get better returns.

Private home prices have enjoyed a good run-up in recent months in Asia.

For example, cost of private residential properties hit a record high in Singapore in the second quarter, rising by an estimated 5.2 per cent.

But investors and asset managers are expecting home prices to moderate across the region.

So, they are turing their attention to commercial properties instead.

Woori Investment & Securities, part of South Korea’s Woori Financial Group, has seen a growing outflow of Korean money seeking such opportunities.

Derek Wong, director, Real Estate Investment & Finance, Woori Investment & Securities, says: “We’re looking favourably at the commercial sector, mainly the office building and retail sector. As a whole maybe we are looking at a range of six to eight per cent minimum for a very safe country but if it’s a high risk country then we need to add in that spread.”

Despite concerns of a supply glut in the office segment in Singapore, Henderson Global Investors says the new buildings under construction in the city have already received 80-90 per cent commitment from tenants.

Hong Kong’s supply picture is also tightening as businesses add to their headcount.

Frankie Lee, head of Property Equities, Asia, Henderson Global Investors, says: “We only conservatively assume a 25 per cent increase in rents in both Singapore and HK this year and given the type of rent increase in the first half this will prove to be quite conservative. I think now we can safely say that 25 per cent this year in these two places for 2010 and perhaps another 15 per cent for 2011 is quite achievable.”

In view of this, Henderson recommends stocks such as Hong Kong Land and Keppel Land to take advantage of the uptick in rents.

It also looks on Industrial Real Estate Investment Trusts favourably, given Singapore’s strong economic growth.

Source: Channel News Asia, 2 Jul 2010

POST-RECESSION, international property investors are turning their attention to Asia in pursuit of new investment opportunities.

Benefiting from the lessons learnt during the 1997 crisis, Asia was relatively less impacted by the global credit crisis of 2008 and 2009. Today, the region is an exciting investment destination. Relatively stronger fundamentals and a lack of dependence on foreign demand have helped mitigate the impact of the severe recession that has hit much of the rest of the world.

Today, we are seeing a growing trend of institutional and private investor capital flowing into the region’s real estate markets. Investors are lured by the underlying economic growth, stable yields, expansion of diverse market segments, as well as the need to broaden their investment portfolios.

Asia’s huge demographic shifts, with strong urbanisation and a rising middle class, also present opportunities for developers in diverse sectors ranging from housing, retail, commercial, industrial as well as leisure and tourism. The trend in commercial real estate perhaps best illustrates the point. While global commercial real estate transaction volumes have bottomed, property demand in Asia has visibly risen.

Rising property demand

The average Asian has a higher propensity to save compared to their Western counterparts and given the current low yields on fixed income products and the high volatility of equity markets, this presents a strong motivation for Asians to be attracted to the relative value-benefits of real estate investing.

In addition, succession planning is often a key factor in investment decision-making in Asia where family-controlled businesses are prevalent. The current climate has encouraged many to invest in property markets, which can allow for a more orderly transfer of assets and wealth from one generation to the next.

Asia has relatively well-capitalised financial systems: its banks have not required massive bailouts, and consumer and bank debt levels are lower than in the US, UK and Europe. Under these conditions, investors and businesses have been more willing to borrow, lend and spend.

In recent months, Singapore, Hong Kong and China have witnessed high transaction volumes and pricing, largely fuelled by low interest rates. In some countries, cooling measures have been undertaken to ensure price growth is in line with the rate of economic expansion.

In Singapore, the private property market continues to show resilience with close to 4,000 private homes sold in the first quarter of 2010, according to statistics from CB Richard Ellis (CBRE) . Similarly, Urban Redevelopment Authority data showed that demand for private homes in prime areas continued to be strong in the first quarter of the year

In Hong Kong, real estate prices reached a 12-year high in the first quarter of this year after increasing 7.5 per cent from the end of last year. According to a housing index compiled by Centaline Property Agency, this was largely due to a combination of low interest rates, limited supply and increasing confidence in Hong Kong’s economic recovery. Office rents in Hong Kong climbed 5.1 per cent in Q1, exhibiting the largest percentage increase out of 25 Asia-Pacific cities, according to Colliers International, which expects rents in Hong Kong to surge 20 per cent in the next 12 months due to the limited supply of new stock in core locations.

The Seoul office market is one of the best positioned office markets in Asia to ride out the downturn. South Korea benefits from the strong economic ties with the world’s fastest growing countries/regions such as China, Asean, Hong Kong and Latin America, which account for nearly half of the South Korean exports.

The economic growth translates into demand for Seoul’s office space, particularly the expansion needs from those corporations that have strong business ties with China and other fast growing emerging countries. The structurally stable rental growth (which normally benchmarks to inflation) and the relatively attractive yield of 6.0-6.5 per cent set Seoul office market apart from the high growth but volatile emerging markets (for example, China, Hong Kong) and the stable but low growth markets (for example, Japan, Australia).

Japan, and in particular the Tokyo office market, continues to play a significant role in real estate investment in the region. Tokyo, behind only London, led all cities worldwide in the volume of commercial real estate transactions closed last year. After posting a steep decline in economic activity last year, with a contraction of 5.2 per cent, Deutsche Bank economists expect a rebound of the Tokyo economy with a 2.8 per cent growth rate this year. With the significant amount of short term debt and CMBS rollovers, coupled with high commercial yield spreads, the Tokyo office market will continue to present attractive buying opportunities over the coming 12-24 months.

That being said, countries such as Indonesia and Vietnam are upcoming markets to look out for.

Indonesia is the largest property market in South-east Asia. Although traditionally a closed market, the government has plans to further deregulate the industry. This move will allow foreigners to purchase homes and commercial real estate with direct ownership

Vietnam’s growth story in recent years is second only to China in Asia. The property market, particularly in the mass to mid-tier residential market, is largely driven by strong demographic factors. These include the growing rural to urban migration, almost two-thirds of its population being under 35 and higher income levels.

Ho Chi Minh City and Hanoi are also expected to see a doubling of population over the next decade. Similarly, a relaxation in property ownership rules to extend the tenure of foreign buyers from 50 to 70 years will further provide incentives for residential projects of higher quality by overseas developers

In the case of Malaysia, office rentals in Kuala Lumpur continue to fall as more supply will come on-stream over the next three years. But foreign investors have gradually begun to flow in, thanks to the Malaysian government’s market liberalisation initiatives made last year.

While China did not come out of the 2008 global recession unscathed, early government intervention and lower levels of debt compared to its western counterparts have helped it weather the storm better than most.

Today, it remains an attractive investment destination for investors due to the sheer size of the country, its strong real estate fundamentals, substantial urbanisation rates, growing middle class and its rise as an economic powerhouse.

Rapid recovery

Since October 2008, the Chinese government has implemented aggressive macro-economic expansion policies, along with fiscal stimulus packages and monetary expansion. These policies have led to the rapid recovery of the domestic market and also signs of a recovery in investment.

The rapid growth in the China economy has led to a 8.7 per cent annual economic growth rate last year. Among the world’s major economies, China is surging at an unmatched pace with a nearly 12 per cent growth rate in the first quarter of this year.

Furthermore the number of high net-worth individuals is increasing in China. The number of people with a personal wealth of more than one billion yuan (S$204 million) has risen rapidly since 2004. At that time, there were 100, but as of last year, the number has expanded to 1,000.

Coupled with rising income levels of the middle class, this spells significant opportunities for the real estate sector to grow. Corporate investment and the increase of private sector investment in real estate will also support this growth and sustain the next phase of recovery. The recent approval of domestic insurance companies to invest in real estate as well as the expectation of the development of a China Reit market will continue to foster the institutionalisation of real estate in China.

Undoubtedly, the rise of China will be one of the greatest macro trends of the 21st century. Today, we are already witnessing China’s economic growth and its transformative implications across Asia and around the world. I am sure future decades will see an even greater increase in Chinese influence.

The rate of development in Asia today, combined with increasing economic growth and the expanding depth, maturity and diversity of its real estate markets will naturally translate to greater opportunities to come.

The writer is the chairman of the Cityscape Asia Conference 2010, the world’s largest B2B real estate investment and development exhibition and conference. Cityscape Asia is taking place from May 18-20, 2010 at Suntec City, Singapore

Source: Business Times, 19 May 2010

Global invested commercial stock fell 6 per cent in 2009.

The report, released in Singapore yesterday, is also bullish on China.

It forecasts that China will overtake Japan and the UK to become the second-largest property market after the US by end-2011. China was fourth in 2009.

Indeed, DTZ is bullish about the entire Asia-Pacific region. The property firm is forecasting a 12 per cent increase in Asia-Pacific commercial invested stock this year.

‘The Asia-Pacific continued its growth in invested stock due to the developing nature of the property market in the region, led by China and India, combined with the rapid reaction of governments to the global financial crisis,’ said David Green-Morgan, head of DTZ Research for the Asia-Pacific.

Despite the slowdown in bank lending in China, he expects Asia-Pacific transaction volumes to increase this year as investors look to take advantage of improving economic conditions and strong intra-regional trade.

Based on its forecasts, DTZ recommends that investors become proactive buyers, as a large number of Asia-Pacific markets – including China and India – offer attractive investment opportunities for the next two years.

According to DTZ, 151 out of 172 markets (88 per cent) worldwide now offer buying opportunities as prices are at or below fair value. Last year, the firm recommended only one market – the London City office market.

‘What a difference a year makes,’ said Tony McGough, global head of forecasting and strategy research at DTZ.

‘This time last year we recommended investors to wait on the sidelines as almost all commercial property markets worldwide were traded at prices above their fair value. This year, following a marked re-pricing of the market, our research shows there has seldom been a better time to invest in prime commercial real estate,’ he said.

In the Asia-Pacific, 84 per cent of the markets covered by DTZ are currently trading at or below fair value – with the office and retail markets looking particularly attractive.

For Singapore, DTZ said the retail and industrial markets are good bets but it is still ‘cold’ on the office sector on concerns of future oversupply.

But the firm’s Singapore office recently raised its forecast for office rentals after the economy put up a strong showing in the first quarter of 2010.

Just a few months ago DTZ had expected prime Raffles Place office rents to fall 10-15 per cent in 2010 – but it now expects a marginal increase of one per cent for the year.

Source: Business Times, 14 May 2010

OFFICE and investment property markets across Asia remained buoyant in the first quarter of 2010 as investor sentiment stayed positive, CB Richard Ellis (CBRE) said yesterday.

In the investment market, the steady flow of small and medium-size transactions seen in the second half of 2009 continued to feed through into this year.

Total direct real estate investment in Asia jumped 215 per cent year on year to US$16.5 billion in Q1 – from a low base in Q1 2009 when activity was muted.

Despite the strong year-on-year growth, transaction volume slipped in China, Hong Kong and Taiwan quarter on quarter.

This dip in Greater China was because investors turned cautious after government policy changes to cool rapidly rising prices.

Elsewhere in Asia, Japan, Korea and Singapore saw a strong rebound in investment activity quarter on quarter, with the volume of transactions in these markets rising 45, 32 and 24 per cent respectively.

Throughout Asian investment markets, transactional activity was largely driven by domestic investors, who accounted for 72 per cent of total volume. But the US$12 billion of transactions completed by domestic investors was US$2.1 billion lower than in Q4 2009 – signalling a rise in cross-border investments.

The rising proportion of cross-border activity in Q1 2010 was partly due to the return of international real estate funds, CBRE said.

‘The quarter saw both opportunistic and core international institutional investors return to Asian real estate markets, attracted by signs of a sustained recovery,’ said Andrew Ness, executive director of CBRE Research Asia.

‘At the same time, well-capitalised Asian Reits and sovereign wealth funds resumed the portfolio expansion they halted during the most severe period of the global economic downturn, and their return was marked by a rising level of acquisitions in Japan and Singapore.’

In the office sector, a recovery in demand was reflected by growth in net absorption for the region overall – it was 31 per cent higher in Q1 2010 than Q4 2009.

Most cities surveyed recorded positive absorption of space, and the overall vacancy for Asian cities declined 80 basis points quarter on quarter to 11.8 per cent.

Rents continued to fall – but more slowly. CBRE’s data shows overall office rents in Asia fell 0.1 per cent in Q1 – much less than the previous quarter’s 1.9 per cent decline.

Mr Ness said office leasing activity is expected to turn robust in the current first half and lead rents out of the downward cycle as more companies boost real estate budgets to support overall regional expansion plans.

Source: Business Times, 6 May 2010

Mr Aamir Rahim, chief executive of Citi Private Bank Asia Pacific, told a briefing: ‘The impact of such liquidity withdrawal on interest rates and the speed of private sector capital deployment to pick up the slack produced by such withdrawal measures obviously are the overriding risks to the property outlook.’

Mr Rahim also flagged inflationary pressures as ‘liquidity continues to chase assets’ and the tightening of monetary policies as key risks to track.

The Chinese government, for example, has introduced yet more measures to cool the property market, ordering developers not to take deposits for sales of uncompleted flats without proper approval.

It has also imposed curbs on loans for purchases of third homes and increased the downpayment requirements and mortgage rates.

However, Citi’s global head of real estate, Mr Thomas Flexner, said the steps are unlikely to overshoot and restrict growth in the other parts of the economy.

Mr Flexner, who was speaking at the briefing in conjunction with Citi’s two-day Asia Pacific Property Conference at the Four Seasons Hotel this week, said that while the bubble in the Chinese residential market was ‘very real’, it is most pronounced at the higher-end and more speculative sectors of the first-tier cities.

In these centres, about 70 per cent of buyers are speculators.

‘We call them speculators, they call themselves investors… There is real vulnerability there but I don’t think it is systemic,’ he added.

‘There is certainly the prospect of potential losses by investors in that sector and on the part of developers who own land banks and who are leveraged.’

However, he said that, unlike a debt implosion or a credit bubble, which had contagion effects, China’s bubble would not affect first-time home owners and would not have a ’significant larger impact on the Chinese economy and its ability to grow over time’.

Real estate is an increasingly popular asset class, with Asian clients of Citi Private Bank having close to 50 per cent of their portfolios in property.

This compares with 33 per cent globally.

Source: Straits Times, 28 Apr 2010

The International Monetary Fund warns that residential real estate markets in East Asia are overheating and that by some measures, valuations are stretched.

In its just-released Global Financial Stability report (April 2010), the IMF notes that since the second half of 2009, housing prices – especially at the high-end of the market – have rebounded quickly in China, Hong Kong, South Korea, and Singapore as well as Australia and New Zealand. In many markets, prices now exceed their 2008 peaks.

The rebound has been mainly driven by ‘unprecedented policy measures to mitigate the impact of the global financial crisis and the ensuing return of risk appetite’.

# Mortgage rates are at historical lows as central banks around the globe have cut policy rates.

# Real estate loan growth has been revived. So has the proportion of real estate loans to total bank lending, which in Singapore was close to 80 per cent in Q4 2009. This is the highest among the markets highlighted in the report. In percentage terms, year-on- year, the real estate loan growth has picked up most sharply in China.

# Governments in China and Korea introduced housing-related tax breaks in late 2008 to help boost their property markets.

# Capital inflows have further fuelled property price increases, particularly in Hong Kong and Singapore.

In Singapore, foreigners and companies accounted for 12.5 per cent of the third-quarter home purchases in 2009, compared with 8 per cent in the previous quarter.

The Fund cautions that by some measures, housing valuations are stretched. Although the average price-to-income ratio has risen modestly, in some markets – notably, China, Hong Kong, Singapore and Korea – price-to-rent ratios are ‘elevated’. It adds that many purchasers have been buying ‘in the expectation of price appreciation, rather than simply for dwelling purposes’.

The region’s booming real estate markets may pose risks to financial stability in the future, according to the IMF. Banks are ‘increasingly vulnerable’ to a price correction. Moreover, as most mortgage loans in Asian economies carry floating rates, ‘the widely anticipated rate hikes in the region will increase the burden on household balance sheets’.

The Fund acknowledges that governments in the region have taken measures to cool real estate markets, including tighter requirements on mortgage lending, increased land supply, and the reimposition of higher transaction taxes, such as stamp duties.

In Hong Kong, the average loan-to-value ratio of new mortgage loans has dropped significantly from its peak in June 2009, and banks in mainland China have started to tighten their mortgage criteria. In response to such measures, the growth rates of transaction values have declined, including in Singapore.

However, the full effects of the cooling measures ‘are still to be seen in the coming quarters’, says the Fund. It also suggests that governments may need to fine-tune their policies ‘to maintain a delicate balance between leaning against housing bubbles and ensuring a solid economic recovery’.

Source: Business Times, 22 Apr 2010

REAL estate investors in Asia think that their domestic markets are already at or near the bottom of the property clock and they expect the region’s markets to recover by the fourth quarter of this year, findings of a new survey show.

Meanwhile, investors in Canada, Latin America and Eastern and Western Europe expect recovery by Q1 2011, and those in the United States in Q2 2011, the survey by real estate firm Colliers International found.

The survey, conducted between February 2010 and March 2010, compiled views from 244 major institutional and private global investors with a combined portfolio exceeding US$300 billion.

It referred to a ‘global property clock’ which equates the market cycle to specific times – 12 o’clock represents the peak of the market and six o’clock represents the bottom. Each six-hour period symbolises rising (from 6.00 to 12.00) and declining (from 12.00 to 6.00) cycles.

Findings revealed that most investors think their domestic market is at or near the bottom, with 41 per cent indicating the market is between 5.00 and 6.00 on the global property clock, while 19 per cent feel their market has already moved from the bottom and is now sitting at 8.00.

Asia was viewed to be at the market’s bottom (6.00).

‘Investors worldwide clearly see the market re-setting in general and about to enter the next up-cycle,’ said Piers Brunner, Colliers’ chief executive for Asia.

The survey also revealed that two out of three respondents are looking to expand their real estate portfolios in the next 12 months – indicating the investors have developed much more confidence in the market.

But a majority of them are still cautious and have expressed a higher comfort level in engaging in just domestic investments. Emerging markets such as Brazil, India, Poland, Ukraine and Vietnam were also singled out as countries for possible future investments.

Mr Brunner said: ‘The tendency to invest domestically is most likely a short-term phenomenon. Cross-border investments will take place once investors have a greater comfort level in the global economy and the global financial system.’

Other findings revealed that investors worldwide believe the availability and ease of getting finance for purchases is still a major concern, and that there is a shifting preference from properties with a ‘high risk’ profile towards high-quality and well-performing assets.

Source: Business Times, 17 Apr 2010

‘There are asset bubbles in Asia. That’s true of Singapore property, of Hong Kong property, of Shanghai property – there’s no question,’ Mr Gupta said at the annual general meeting of the American Chamber of Commerce in Singapore, where he was the keynote speaker.

‘But the nature of the bubble is not very different from previous cyclical bubbles we’ve seen around Asia. So I think there will be a correction – markets will level off – but I don’t think we’ll see a crash which brings everything back down on its knees.’

Asian central banks are likely to tighten monetary policy by raising borrowing costs more quickly than expected this year, partly in response to the asset bubbles, he told reporters afterwards.

‘Most Asian central banks might be a little bit behind the curve on raising rates, but I think we’ll start seeing that pretty quickly. I think you’ll see more tightening this year than people expect.’

On average, DBS analysts expect interest rates across most of Asia to rise by 1-1.25 percentage points by the end of this year, he said.

But he stopped short of criticising governments and central banks for not acting sooner to cool the property market in Singapore and elsewhere in Asia.

‘In hindsight it’s easy to say that we could have done more. Given where the economies are coming from, being prudent about withdrawing monetary easing and stimulus was the right thing, but I think now is when you might want to see a faster pace of tightening.’

Here, analysts are split over whether the Monetary Authority of Singapore (MAS) will shift its neutral stance on the Singapore dollar in its monetary policy statement tomorrow by nudging the currency higher, or keep it unchanged.

But many economists believe that Singapore’s economic output surged in the first quarter – by as much as 14 per cent – compared to the same period last year, making it likely that MAS will tighten monetary policy later this year, if not this week, to cool inflationary pressures stemming from the rapid growth.

‘Asia, in particular, has rebounded in a convincing manner,’ Mr Gupta said, citing anecdotal evidence from DBS’s operations across the region.

Credit-card spending is rising for various goods and services, including luxury items – signalling genuine optimism among consumers in Asia, he said. ‘This is not about people who’ve been able to get some money from a government voucher programme and are going out to buy groceries. People have confidence that things are good around here.’

Source: Business Times, 13 Apr 2010

While UK properties offer ‘attractive’ yield, real estate in Asia is supported by the strength of the region’s economic growth, Michael Turner, head of global strategy and asset allocation at Aberdeen, said on Tuesday.

He recommended buying into real-estate investment trusts and funds that hold property, without giving specific names.

‘People should allocate more money than they do now in real estate as a hedge against inflation,’ Mr Turner said. ‘Real estate, whether or not there’s inflation as a result of macro policy, is attractive in its own way.’

China, India and Australia have tightened monetary policy to curb inflation as the global economy recovers from the worst recession since World War II. Interest rates in advanced economies can remain accommodative for an ‘extended period’, while policy in ‘a number of emerging economies’ may have to be tightened ‘relatively soon’ because of signs of accelerating inflation or credit booms, the International Monetary Fund said in a Jan 19 staff note.

Minutes from the Australian central bank’s March meeting, released on Tuesday, said that policymakers raised borrowing costs this month for the fourth time in five meetings because the risk of faster economic growth stoking inflation outweighed the potential for renewed financial market turmoil.

In the US, where the housing market is still flat, the Federal Reserve on Tuesday repeated its pledge to keep its main interest rate near zero for an ‘extended period’.

It is a different story in Asia and Britain. UK house prices rose in February at the fastest pace in more than seven years, research group Acadametrics Ltd said on March 12. Nine of 10 Britons say that buying a home is a ’sensible investment’ even after the nation’s worst housing slump in three decades, a survey by YouGov Plc published on March 2 showed.

In Asia, property prices have risen as economic growth in the region outpaces the rest of the world’s. Hong Kong’s home prices surged almost 30 per cent last year, Centaline Property Agency Ltd said this month. Australian home prices jumped 13.6 per cent in 2009.

The World Bank forecast in January that the global economy would expand 2.7 per cent this year. China’s economy, the world’s third biggest, will top last year’s 8.7 per cent growth rate in 2010, the nation’s central bank estimated this month.

Singapore’s gross domestic product is forecast by the government to grow between 3 per cent and 5 per cent this year.

Source: Business Times, 18 Mar 2010

While property prices in more mature Asian markets such as Singapore, Hong Kong and Thailand are still some way from their historical highs – courtesy of the beating they took due to global financial crisis – they have been moving up in tandem with stock markets, and attracting interest from individuals in the upper end of the high net-worth range.

‘The very affluent go where they choose to,’ says William E Heinecke, chief executive of Thai conglomerate The Minor Group, which among its diverse interests is a key player in the hospitality and lifestyle industries, with hotels, resorts and residential properties throughout the region. ‘A lot of people come to Thailand for the weather,’ he says. ‘As a result, if you can afford it, you have homes where you spend time.’

Minor launched its first high-end residential property project in 1995 at the Four Seasons Residences in Chiang Mai. Its growing portfolio of luxury developments includes The Estates Samui in Koh Samui, and the high-rise St Regis Residences in Bangkok is slated for completion next year. Prices for its various properties range between US$2 million and US$6 million.

Mr Heinecke says that Indian and Chinese nationals, who may have domicile in key major cities around the world, have emerged as strong players in the mega-luxury bracket, but traditional buyers from other Asian countries as well as Europeans and Americans are also active in the region. ‘As long as people have money and lifestyle is important, they are going to continue to buy in great locations,’ he says.

He adds that a significant new trend involves branded luxury residences which are located within a hotel property and can be part of the rental pool, commanding rates of several thousand dollars a night. ‘When owners visit their properties once or twice a year, it makes sense to have them professionally managed,’ says Mr Heinecke.

Mr Heinecke says that the quality at the luxe end of the market continues to improve, and there is also no shortage of high-end properties and people who are willing to buy them.

‘The bar continues to go up, and competition raises the bar,’ he says.

The luxury investment bar continues to go up as well in Singapore, where the recent launch of hotel and property developer YTL Corporation’s Kasara – The Lake collection at Sentosa Cove has yielded a highly positive result. The boutique development’s 13 villas have all been sold, at prices ranging from S$14 million to over S$25 million.

Of the buyers, seven were foreigners from Asia while six were locals. In general, there are several types of high-end buyers, says Kemmy Tan, director of international real estate at YTL Singapore.

Asian buyers are typically from Hongkong, Indonesia, Malaysia and China, with an increasing number of expatriate Indians as well. ‘American buyers may hold US passports but may not be living in the US, or they may be in places like Hongkong and have some interest in Asia,’ says Ms Tan. At the peak of the market, there were also investors from places such as Ireland. ‘When they invest, they invest with a longer-term view.’

Despite – or even because of – its restrictions on foreign ownership, Singapore has long been a significant target for investors. ‘They are property investors who own homes in key cities,’ she says. ‘If values are expensive in their home countries and Asia looks attractive, they will come here – these are definitely people with multiple homes in different cities and resorts.’

Buyers of properties in resort destinations are different from those who buy in Sentosa Cove, says Ms Tan. ‘They buy in Phuket and Bali for the resort lifestyle – those who buy here want the best of both worlds. They might have business interests and they want the comfort of city living. For wealthy investors, especially during the financial crisis, they are looking for good buys in ’safe’ locations.’

The proportion of foreign investors versus locals has increased tremendously in the past few years, she adds. And the good news is there is still some upside.

‘Real estate has always been a good hedge against inflation,’ says Ms Tan. ‘For luxury property, we are at least 10 to 15 per cent below the peak, so there’s room to move up.’

Elsewhere in Asia, there have been recent reports of a US$45 million riverfront mansion on the market in Shanghai’s financial district – an indication of the real estate boom in China. If those kinds of prices look a little scary, then there are always less heated up markets like Taiwan, where analysts report that foreign investors make up less than one per cent of the property market. Where opportunities go, of course, the money will always follow.

Source: Business Times, 13 Mar 2010