China's residential development sites a draw

Jianwai Soho, a mixed-use residential and commercial complex, in Beijing, China. In the first quarter this year, 88 per cent of investments in residential sites from Singapore flowed into China, 2 per cent higher than last year's figure, according to
Jianwai Soho, a mixed-use residential and commercial complex, in Beijing, China. In the first quarter this year, 88 per cent of investments in residential sites from Singapore flowed into China, 2 per cent higher than last year's figure, according to a report by property firm Knight Frank.PHOTO: BLOOMBERG

Investors looking to snap up residential development sites in the Asia-Pacific are increasingly setting their sights on China, according to a new report.

It noted that in the first quarter this year, 88 per cent of investments in residential sites from Singapore flowed into China.

A similar trend was observed last year, where 86 per cent out of the US$3.03 billion (S$4.19 billion) of investments in Asia-Pacific residential land from Singapore went into China, said the report by property firm Knight Frank.

Mr Nicholas Holt, head of research for Asia-Pacific at Knight Frank, said that while the size of the mainland Chinese market, geographic proximity, language and cultural similarities have attracted Singapore investors, a large part of the investment can be attributed to companies or developers which have origins in China but are based elsewhere.

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The region has seen an overall increase in cross-border residential land investment activity, which has risen by around 137 per cent over the last decade, from US$17.8 billion in 2007 to US$42 billion in 2016.

Ms Alice Tan, director and head of consultancy and research at Knight Frank, said: "Singapore- based developers, cognisant of the growing tide of overseas prospects in the longer term, are stepping up to look outward for lower-cost assets."

She added that cities such as London, Sydney, Melbourne, as well as emerging markets like Vietnam and Malaysia, are countries investors are considering. Local factors have also posed as significant bugbears for developers looking to take up projects here, said the report. These include cooling measures and the five-year project completion deadline for residential projects.

Limited government land sale sites as well as an increasing number of bidders since early 2016 have made acquiring land more expensive too.

Despite these concerns, Ms Tan expects the allure of investing in Singapore's residential market to remain intact, especially from smaller local developers and foreign investors. "Singapore's reputation as a safe haven for businesses and investment, along with emerging signs of recovery, have fuelled the fever for both government land sales and private sites."

"The competition for residential land is set to heighten as both Singapore-based and foreign developers jump on the bandwagon," she said.

A version of this article appeared in the print edition of The Straits Times on May 27, 2017, with the headline 'China's residential development sites a draw'. Print Edition | Subscribe