Singaporeans eager to diversify real estate investments abroad: CBRE

SINGAPORE - Singaporeans are the most keen to add real estate to their portfolios among their peers in the region this year, a new report has shown.

Low interest rates here and a desire to expand their portfolios beyond home ground were the main drivers behind their confidence in foreign investments, said CBRE on Tuesday.

More than 70 per cent of Singaporeans said they had intentions to invest abroad, in a survey of 300 respondents which included individuals, funds, asset managers and real estate investment trusts from Asia Pacific.

This was well up from the overall percentage of about 55 per cent, and more than in Hong Kong and mainland China, where about 60 per cent of investors said they were keen to buy property overseas.

Last year, Asian investors diversified and spent about US$40 billion in markets outside their home region, up 25 per cent from the previous year.

However, investors said they were concerned with high prices of real estate, the availability of investible properties and uncertainty over the economic outlook.

"Our view is that investment liquidity will remain abundant in the regional real estate market but that deal flow will be limited by investment opportunities and pricing. We thus expect only a mild increase in investment turnover in 2015, by around 3 to 5 per cent year-on-year, said Ms Ada Choi, senior director at CBRE Research Asia.

This implies a lower risk appetite among investors, added CBRE, as reflected in a stronger liking for prime properties in central areas. About 43 per cent of investors said they preferred prime assets this year, up 14 percentage points from 2014.

"Investors seeking prime core assets see Asia Pacific as a key component of the diversification of their global portfolio and are increasing their allocations to the region," said Mr Richard Kirke, managing director of CBRE Asia Pacific, capital markets. This trend is being led by institutional investors and Reits, which hold properties for longer periods for stable income streams.

Investment yields could be compressed, as a result, as investors flock to these prime properties.