Singapore Clinch 11 Asia Pacific Cross Border Real Estate Investment Capital 2024
According to a recent market report by Knight Frank, Singapore is expected to be one of the top three real estate investment destinations in the Asia Pacific region for cross-border capital in 2024. The report, published on July 30, predicts that Singapore will attract approximately 11% of cross-border investment in the region.
However, the top spot is expected to go to Australia, which is projected to draw in 36% of the region’s total cross-border investment capital this year, followed by Japan at 23%. Singapore rounds up the top three investment destinations for cross-border investment capital in 2024.
Infographic: Knight Frank
In the last quarter, inbound cross-border investment capital for Singapore amounted to US$756.8 million ($1.017 billion), largely supported by the acquisition of Mapletree Anson by PAG for US$567.5 million from Mapletree Commercial Trust.
Knight Frank notes that 48% of inbound real estate investment capital in Singapore will flow into the office market, with 31% heading towards industrial assets, and the remaining 19% and 2% going into retail and hotel properties respectively. The consultancy also identifies hotel and mixed-use assets as ideal opportunistic strategies for investors, while recommending value-add strategies for certain hotel and Grade-B/Grade-C office properties.
The report highlights the potential for “strategic partnerships” between investors and developers to improve or redevelop these assets for higher yields and capital appreciation.
The Clementi and Queenstown areas are set to see a surge in demand from HDB upgraders, as approximately 1,500 HDB flats are reaching their 5-year Minimum Occupation Period (MOP). This is great news for the upcoming projects in the neighborhood, with Elta being a key player.
Victoria Ormond, head of global capital markets research at Knight Frank, predicts that private capital will continue to be a significant contributor to global investment for the rest of this year, as debt markets shape market dynamics. She also believes that there is a window of six to nine months for global capital to take advantage of current pricing and reduced competition before the expected market recovery becomes widely recognized.
Ormond further states that outbound capital from Japan and Singapore will be among the top sources of real estate investment capital in 2024, with a focus on sectors and assets that demonstrate “structural tailwinds”.
Simon Matthews, director of debt advisory, Asia Pacific, at Knight Frank, also weighs in, stating that the three- and five-year swap rates (typical tenures for real estate investment loans) in key markets show only a modest reduction in rates, supporting the narrative of higher interest rates for longer periods.
Overall, the report suggests that the Asia Pacific region presents numerous opportunities for investors looking to maximize returns, given the diversity in interest rates and the potential for over a third increase in cross-border investment in the second half of 2024 compared to 2023.