Investors upbeat on real estate outlook

PHOTO: Investors upbeat on real estate outlook

Investors in Asia generally have a positive outlook on the real estate market next year with Singapore on the investment radar for many, a survey has found.

The majority - 70 per cent - of Asian investors said they were likely to expand their property portfolio and lift their level of investment in the region, according to the Colliers 2013 Global Investor Sentiment survey released yesterday.

About 41 per cent of respondents were also looking to achieve returns above 20 per cent.

Asia and Eastern Europe were the only two regions where targeted returns were above 20 per cent for the majority of those polled.

However, Asian investors cited the difficulty of raising equity as a major concern.

This is followed by a lack of property on the market and uncertainty over the economic situation.

The region is also the most attractive to Asian investors with the regional outlook turning even more positive when a long-term view is taken.

Most Asian investors - or 68 per cent - believe that market conditions will improve in the next five years with only 12 per cent believing that investment conditions will decline.

Shanghai, Hong Kong, Singapore, Tokyo and Beijing were the top five cities that investors said they would focus their investments on in future.

About a quarter of Asian investors said they will set their sights on office developments in the Central Business District or other urban locations over the next six months, while 17 per cent intended to make "opportunistic investments".

Another 15 per cent reported a focus on industrial and logistics opportunities.

The key challenge, it seems, is sourcing for good investments.

Most investors in Asia believe that good investments exist in the market but finding good stocks for investment is a challenge, the Colliers survey said.

"The typical issues such as the potential threat from the euro zone crisis and the elections in the United States and China have been frequently talked about, but these are not rated by investors as the most important," it noted.

But Asian investors believe that real estate continues to be a good hedge against inflation.

After the third round of quantitative easing in the US, developments in domestic markets have also become the main concern for real estate investment for many of those surveyed, it said.

A private investor based in Singapore, for instance, mentioned that local property fundamentals in each domestic market are the key consideration for investment.

The investor believes that there will be a clearer direction on how to act in 2013 as most elections have already taken place this year, the survey said.

Meanwhile, access to finance is expected to be easier next year as the supply of credit is readily available from most Asian banks, it added.