Singapore to clinch 11% of Asia Pacific cross-border real estate investment capital in 2024
Singapore will be among the top three real estate investment destinations in the Asia Pacific region for cross-border capital for the whole of 2024. The city-state is expected to attract approximately 11% of cross-border investment going through this region.
This was one of the findings from a market report on cross-border capital trends in Asia Pacific, published by Knight Frank on July 30.
The pole position will go to Australia, which is expected to draw in 36% of the region's total cross-border investment capital this year, followed by Japan, which could lure 23% of cross-border investment capital. Singapore rounds up the top three investment destinations for cross-border investment capital this year.
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According to Knight Frank’s predictions, 48% of inbound real estate investment capital into Singapore will flow into the office market, with 31% heading into industrial assets, and the remainder ending up in retail (19%) and hotel (2%).
Infographic: Knight Frank
Inbound cross-border investment capital last quarter amounted to US$756.8 million ($1.017 billion), largely supported by the PAG’s acquisition of Mapletree Anson for US$567.5 million from Mapletree Commercial Trust.
Knight Frank identifies hotel and mixed-use assets as ideal opportunistic strategies, while some hotel properties and Grade-B/Grade-C office properties present compelling value-add strategies. The consultancy says that investors should look out for “strategic partnerships” between investors and developers to improve or redevelop these assets for higher yields and capital appreciation.
Victoria Ormond, head of global capital markets research at Knight Frank, says that private capital is expected to remain a “significant” contributor to global investment over the remaining months of this year as debt markets shape overall market dynamics.
“We predict a six- to nine-month window for global capital to capitalise on current pricing and reduced competition before the anticipated recovery becomes widely recognised,” says Ormond.
She adds that outbound capital from Japan and Singapore will be among the top sources of real estate investment capital in 2024, and investors will target sectors and assets that demonstrate “structural tailwinds”.
Read also: Asia Pacific investment volumes down 22% y-o-y in 3Q2023: JLL
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“Variations in interest rates across the region, ranging from marginal increases in Japan to steep hikes in markets like Australia, Hong Kong SAR, Singapore and South Korea, impact real estate values. However, this diversity presents numerous opportunities for investors looking to maximise returns,” says Ormond.
She adds that rate cuts will pave the way for cross-border investments in the Asia Pacific region to increase by over a third in 2H2024 over 2H2023.
Simon Matthews, director of debt advisory, Asia Pacific, at Knight Frank, says: “The three-and five-year swap rates (typical tenures for real estate investment loans) in key markets show only a modest reduction in rates and support the narrative of higher for longer interest rates.”
“Variations in interest rates across the region, ranging from marginal increases in Japan to steep hikes in markets like Australia, Hong Kong SAR, Singapore and South Korea, impact real estate values. However, this diversity presents numerous opportunities for investors looking to maximise returns,” says Ormond.
She adds that rate cuts will pave the way for cross-border investments in the Asia Pacific region to increase by over a third in 2H2024 over 2H2023.
Simon Matthews, director of debt advisory, Asia Pacific, at Knight Frank, says: “The three-and five-year swap rates (typical tenures for real estate investment loans) in key markets show only a modest reduction in rates and support the narrative of higher for longer interest rates.”