S’pore firms top investors in property Down Under

Business Times: Mon, Sep 05
(SINGAPORE) Singaporean companies have become the largest group of foreign property investors in Australia, new data shows. Figures compiled by CB Richard Ellis (CBRE) for BT show that in the first half of 2011, Singapore-based purchasers accounted…

(SINGAPORE) Singaporean companies have become the largest group of foreign property investors in Australia, new data shows.

Figures compiled by CB Richard Ellis (CBRE) for BT show that in the first half of 2011, Singapore-based purchasers accounted for 19 per cent of all commercial and industrial property investment deals in Australia by value – or 51 per cent of all foreign property investments by value.

In 2010, in comparison, Singaporean investors accounted for just 4 per cent of all purchases in Australia, or 21 per cent of all foreign purchases.

Malaysian investors were the largest single bloc of investors last year; they represented 5 per cent of all purchases. Singaporean investors came in second.

In terms of total quantum, Singaporean investors have sunk more than A$1.1 billion (S$1.4 billion) into Australian property investments in H1 2011, compared to around A$440 million over the whole of 2010.

The figure for H1 2011 was boosted by a few large deals. In June, for example, the Government of Singapore Investment Corporation (GIC) and Australand Property Group formed a logistics joint venture and said they will initially invest in a portfolio of eight prime industrial assets in Australia. These assets have a total value on completion of A$220 million.

Deals continued in the second half of the year. K-Reit Asia in July also said it will buy a 50 per cent interest in an office building in Sydney’s central business district for between A$154 million and A$170 million.

Analysts said that more Singapore-based investors could be looking at Australia properties due to their attractive valuations.

‘Other markets in Asia have reached the top of the cycle; Singapore and Hong Kong, for example, are pretty expensive at the moment,’ said Neil Brookes, CBRE’s Sydney-based director for international investments.

By contrast, office and industrial properties in Australia are still trading at discounts of about 20 per cent off their 2007 peak capital values, he said.

This means that yields are high. According to Mr Brookes, prime Grade A office space in Sydney and Melbourne now offers investors yields of around 7 per cent per annum.

David Green-Morgan, DTZ’s head of Australia research, said that despite the high Australian dollar and weak first-quarter GDP performance, Australia still remains a favoured location for regional and global fund managers.

‘The amount of money targeting Australia has increased over the last 12 months as many European and American funds look to increase their exposure to the Asia-Pacific region,’ Mr Green-Morgan said. ‘The landscape within the region is also changing as sovereign wealth funds and large pension funds look to increase their exposure to property.’

DTZ’s data shows that in Q2 2011, overseas investors accounted for 35 per cent of all activity – well above the three-year quarterly average of 23 per cent.
Source: Business Times © Singapore Press Holdings Ltd.

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