More than a decade since the global financial crisis, Asia Pacific real estate continues to produce strong returns, but as the clock ticks down towards the end of the current cycle, caution is increasingly embedded into investor strategies. This year's investment prospect rankings reflect investor preference for regional markets that are large, liquid and defensive.
This report is jointly produced by PwC and the Urban Land Institute and aims to shed light on real estate investment and development trends, and other issues throughout the APAC region.
As recently as our 2017 report, Singapore placed just 21st in our investment rankings, underlining how quickly the tides can shift. This year, Singapore rebounded from the slump, reclaiming the top spot in city investment prospects for 2020, and second spot in city development prospects.
Today, the office sector has largely absorbed the oversupply, and with vacancies at an all-time low and limited supply in the pipeline, confidence in medium-term prospects has returned.
Landlord willingness to sell into the stronger market also has helped liquidity. Office yields, at 3.6%, are some of the lowest in the region, and prices remain high by global standards. Rentals, meanwhile, driven by takeup from coworking operators, have been strong.
Singapore was also one of the few markets regionally to see a surge in transactions in the first half of 2019, with most activity driven by cross-border capital.
"There is an increase in transaction value driven by cross border capital in 2019 and an improvement in the commercial office sector. The positive developments have contributed to Singapore’s ranking as the top city by investment prospect in 2020. The city-state’s pole position is a testament to its strong fundamentals and investors’ needs for defensive assets with the uncertain economic climate. There are still investment opportunities, and we continue to see increased investors’ interest in alternative asset classes, including data centres, purpose built student accommodation and healthcare."
Yeow Chee Keong
Real Estate and Hospitality Leader
Tel: +65 9675 0891