SGX, Fraxtor, Bain & Co, DLA Piper See Singapore Growing as Property Investment Hub

Singapore’s favourable business environment is leading a growing number of global investors to establish bases in the city-state, while also making the Southeast Asian nation a hub for pursuing outbound investments, according to a panel of top executives who spoke at Mingtiandi’s Singapore Forum on Tuesday. Watch the full recording>>

While Singapore’s resilient property market has delivered stable returns, the city-state’s limited land and real estate resources have motivated investors to look beyond the Lion City for investment opportunities, according to Ronald Tan, senior vice president of capital markets, global sales and origination at the Singapore Exchange (SGX).

“Singapore as a hub is very, very stable for real estate,” said Tan. “And for investors, that delivers good returns. Now with that base, because Singapore is limited in our land and resources, the reality is that many of the sponsors and investors have had to look outwards, beyond the stable returns we’re getting in Singapore, and that created a momentum – a force – to invest in global real estate assets.”

The event, which was sponsored by Yardi, saw Tan joined on-stage by Ciaran Londra, partner at DLA Piper; Samuel Lee, chief executive and executive director of Fraxtor; and Tom Kidd, partner at Bain & Company.

Penchant for Property

With Singapore home to some 59 percent of the family offices in Asia as of 2023, according to DLA Piper, real estate has stood out as the investment of choice for this cohort, with Tan attributing the predilection for property to many of these investors having earned their wealth through property development. Some 90 percent of family offices that had served as cornerstone investors for Singapore-listed REIT IPOs in recent years have hailed from a real estate background, according to Tan.

Real estate is also preferred by customers on Singapore-based Fraxtor’s blockchain-enabled platform, which enables investors to purchase tokenised real estate assets and projects across a range of sectors, geographies and risk profiles at fractional sized outlays.

“We manage a large group of investors ranging from individual investors, high net worth, mass affluent, family offices and even smaller institutions, and a lot of them have a strong preference for real estate,” said Lee. “I think one of the reasons is in the DNA in Singapore, where the home ownership rate is over 90 percent, one of the highest in the world.”

In addition to a preference for real estate, the influx of private and institutional capital to Singapore has also been driven by the availability of high-calibre investment talent in the city, strong financial and legal infrastructure, as well as a favourable geography that makes the city an ideal location to access to Southeast Asia, North Asia, India, and Australia.

“As capital has flowed here, you’re seeing talent flow here as well,” said Kidd. “We worked with a family office from the US that opened up an office here in Singapore and the primary reason was talent…and the legal infrastructure and the financial infrastructure certainly helped. But I think we’re increasingly seeing that there’s great investment talent here. And that’s a virtuous flywheel.”

Australia, Japan, UK in Focus

With Singapore’s limited space offering a diminishing number of investment opportunities, property investors in the Lion City are eyeing other geographies for capital deployment, with Australia, Japan, and the UK ranking as the most preferred markets for outbound investment.

“Australia is probably the number one destination when I’m speaking to investors in Asia,” said Londra. “The UK and Japan come after that, but Australia is certainly number one…the build-to-rent sector in Australia is clearly attracting the most interest.”

Greater visibility on interest rate policy in the UK has also drawn some family office investors to study income plays in London’s prestigious West End area, according to Londra, with office assets in the district trading at 6 percent compared to 4 percent prior to the pandemic.

An annual survey of Fraxtor’s clients also revealed interest in Australia and Japan, along with Singapore, with residential, industrial, and hospitality assets on their preferred shopping lists.

“We do an annual survey where we speak to a few hundred investors to get a sense of what they want, and for this year’s survey, in terms of the asset classes that our investors like, the top three ranking is residential, industrial and hospitality,” said Lee. “And in terms of geography, the markets that most investors favour would be Singapore, Australia and Japan.”

Within Singapore, investors are venturing into niche sectors including hospitals and life science properties to tap growing demand for healthcare on the back of an ageing population.

“Investors…are venturing a little bit further from their cores to some of these smaller, more niche sectors,” said Kidd. “If you think about the themes of aging Asia, wealthy Asia, what do people consume when they’re getting older and wealthier? Healthcare is a big part of that, so life sciences fits within that theme. Broader healthcare infrastructure assets, whether it’s hospitals, or medical offices, we’ve seen quite a bit of interest there, particularly as capital flows away from core sectors like office and residential into some of these niche sectors. And Singapore could benefit from that.”

A Panel in Pictures