Oxford, Ivanhoe, Savills, PropertyGuru Predict APAC Buying Opportunities at Singapore Forum

The success of Singapore property owners in staving off discounted assets sales has Southeast Asia’s wealthiest nation playing catch-up in the region’s real estate recovery, even as the market begins to recover, according to top investors, advisors and analysts speaking at Mingtiandi’s annual forum in the city-state on Tuesday. Watch the full recording>>

“In Singapore, I would say, on its own the repricing (of properties) hasn’t been as significant,” said Alessandro Fiascaris, head of APAC at Oxford Properties, the real estate arm of Canadian pension fund OMERS. “It’s probably going to lag a little bit. But even here I think the market is improving.”

Fiascaris made his comments in a discussion with senior executives from Ivanhoe Cambridge, Savills and PropertyGuru in a conversation covering the outlook for real estate markets in the Southeast Asian hub and throughout the broader region.

After a pair of big-ticket deals jolted Singapore’s slumbering office market in the second quarter, the keynote panel of experts see pockets of opportunity arising around the region as major markets look forward to cuts in interest rates.

Green Shoots Detected

The Lion City saw two large trades of centrally located commercial properties during the April-June period, led by Mapletree Pan Asia Commercial Trust’s sale of the Mapletree Anson office tower in the Tanjong Pagar area to regional private equity titan PAG for S$775 million ($574 million) ― a deal ranking as Singapore’s largest office transaction in two years.

In the other transaction, City Developments Ltd bought out the Delfi Orchard tower for S$439 million, with the Singaporean giant believed to be planning to combine the mixed residential and commercial complex with the neighbouring Orchard Hotel Singapore to create a residential, commercial and hotel project.

“The worst seems like it’s behind us,” said Laurent Fischler, head of APAC investments at Ivanhoe Cambridge, a division of Canadian pension fund CDPQ. Zooming out to the broader region, Ivanhoe also favours select asset classes in Japan, Australia and India.

“We’re still very much keen on logistics in most of these markets, and residential,” Fischler said. “So the beds-and-sheds theme, I think, is alive and well.”

Price Gap to Narrow

Jeremy Lake, managing director for investment sales and capital markets at Savills Singapore, sees ample deal interest despite a persistent gap in pricing expectations between buyers and sellers, which he expects to narrow.

“But the concern I have is that sellers react more quickly than buyers,” Lake said. “By that I mean, the expectation of lower interest rates means that when we speak to sellers, they’ve already factored it in, and they think that interest rates have already gone down 50 basis points, whereas buyers didn’t get that memo yet.”

With strata offices in the city-state trading at 2.5 to 3 percent net yields, these assets remain less than compelling for pure investors, according to Lake. “The motivation to buy for an end user is stronger than it is for an investor at this point in time,” he said. “Things can change.”

Lee Nai Jia, head of real estate intelligence for data and software solutions at PropertyGuru, said data from the company’s platform shows a “sudden shift in terms of optimism” in Singapore’s residential market, with asking prices on the rise. Users are searching around, he said, but transaction volume continues to lag behind.

“And so what we are seeing is that it chimes very well with what Jeremy was saying about the gap, and it’s very real,” Lee said. “We see that prices continue to go up irrespective of whatever noise or negative news. The Singapore property is very resilient in that sense from a seller’s perspective.”

A Panel in Pictures