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Singapore out of top 10 in investment prospect ranking for 2016

Lee Yen Nee

SINGAPORE – The Republic has fallen out of the top 10 cities with greatest investment prospects next year in Asia Pacific, with sentiment suppressed by a soft economy and property curbs, a report by PwC and Urban Land Institute (ULI) showed.

The report, Emerging Trends in Real Estate in Asia Pacific, ranked Singapore 11th in its investment prospect rankings. This is the fourth consecutive year that the Republic has slipped in rankings since topping the chart for 2011 and 2012. This is also the first time Singapore is outside the top 10 cities since the report was first published in 2007.

Tokyo topped the rankings for the third year in a row, with Sydney and Melbourne rounding up the top three cities with the most investment prospects.

The findings are based on surveys and interviews with 343 industry experts including investors, fund managers, developers, property companies, lenders, brokers and consultants. Published annually, the report provides an outlook on real estate trends in the Asia Pacific region.

“For Singapore, we’ve seen transaction volume being just a fraction of what it was the previous years. The main reason for that is more supply and less demand. In the office space, we have fewer people that are looking for more space and there are a few reasons for that,” principal author of the report Colin Galloway said at a media briefing.

Mr Galloway, who is a consultant for ULI, added that the slowdown was a result of tighter immigration policies have restricted expansion plans of companies here, a financial industry that is growing at a slower rate as well as companies moving out to less centralised locations.

Such trends have suppressed rents by as much as 5.5 per cent quarter-on-quarter in the July-to-September period this year, the report said.

Meanwhile, the residential market in Singapore is “in a terrible state” largely as a result of Government measures to stem increasing home prices. That negative sentiment has also spilled over to other segments of the market, according to the report.

Nevertheless, the report said Singapore remains a market where institutions are looking to buy. Some interviewees in the report said prices here could hit a bottom in the next 18 months, which would present opportunities to investors.

“Singapore is always on anybody’s list as a preferred investment destination, it’s just whether or not there are opportunities and whether or not they’re the right opportunities,” said Mr John Fitzgerald, Asia Pacific chief executive for ULI.

Mr Yeow Chee Keong, PwC Singapore’s real estate and hospitality leader, agreed.

“If you look at Singapore as a whole going forward… the (survey and interview) respondents have less tendency to sell, even though those at the end of the fund cycle may sell because they’ve made enough money. There are still people who want to come to this market, so it’s not that bad. I think as a city state, we can still attract interests and people will come in when the price is right,” Mr Yeow said.

 

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