Singapore investors shun real estate deals in home market

Unlike other countries in the Asia Pacific, Singapore saw domestic real estate investment drop 16 percent in 2016, while inbound investment...

Domestic investment in Singapore real estate fell 16 percent in 2016, according to JLL. 

Unlike other countries in the Asia Pacific, Singapore saw domestic real estate investment drop 16 percent in 2016, while inbound investment surged 441 percent from the previous year, revealed a JLL report.

The decline comes as domestic investors focus on diversifying their exposure overseas.

“Foreign investors’ appetite remained robust as the price gap between buyers and sellers in Singapore has narrowed following recent price corrections, and many seized opportunities to purchase assets in the office sector at lower prices,” said Tay Huey Ying, Head of Research at JLL Singapore.

The report noted that domestic investors were active in most Asia Pacific real estate markets last year, as many opted to buy real estate assets in their home market given the global economic and political volatility.

South Korea, for instance, saw domestic investment into real estate assets soar 75 percent to US$12.4 billion, while domestic investment in Chinese real estate jumped 50 percent to US$29.1 billion.

Looking ahead, JLL expects investment activity in the Asia Pacific to remain stable this year considering the solid appetite from institutional investors, the low interest rate environment and strong fund raising activity.

“However, as pricing in major gateway cities are at record levels and given the shortage of investable real estate assets, these factors could play a part in limiting investment activity.

“As for outbound investment activity from Asia Pacific, tighter government controls over capital outflows may limit Chinese outbound investment in the near term particularly for large sized deals which could take longer to conclude.”

 

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