The fifth largest real estate investor globally, Singapore also tops list of Asian investors in the US
SINGAPORE, 25 January 2018 - Overseas real estate investments involving Singapore-based investors rose by about 40% to a record US$28.4 billion last year, upending the figure achieved in 2015 (US$27.6 billion). The data, estimated from Real Capital Analytics, takes into account total investments into stabilized assets as well as land purchases.
Sigrid Zialcita, Managing Director, Research, Asia Pacific, said, "Singapore is the fifth largest source of capital in 2017, after the United States, Hong Kong, China and France. The city-state has also emerged as the largest Asian investor in the US, surpassing the combined total from Chinese and Hong Kong firms."
In recent years, Singapore-based investors have become one of the largest and most dynamic and forward-looking sources of capital entering the U.S. markets. While foreign investment has tended to focus on trophy office, hotel and residential properties in the gateway CBDs, Singapore-based investors have focused on industrial, suburban multifamily and more niche asset classes, including student housing and data centers. Other than the major metropolitan areas which have received the bulk of investment, Singapore-based capital is entering secondary and tertiary U.S. markets as well.
David Bitner, Vice President, Head of Capital Markets Research, Americas, said, "In so doing, Singapore-based investors are targeting assets supported by strong secular drivers and entering markets offering attractive relative values - both of which augur well for continued robust cross-border transaction activity as the cycle continues."
The largest Singaporean deal involved GIC's acquisition of Monogram Residential Trust, through its stake in a Greystar fund, for US$4.4 billion. The sovereign wealth fund, also the republic's largest outbound investor last year, has shifted its strategy in the US from logistics to residential properties. GIC also started 2018 with a US$247.5 million investment in multi-family properties in the US.
Priyaranjan Kumar, Regional Executive Director, Capital Markets, Asia Pacific, said, "Singapore has long been and continues to be a trade surplus economy with a small domestic deployment base. Hence, both sovereign and non-state companies have been pioneers in global real estate investments.
"It has a diverse set of companies with very different costs of capital. SWFs, REITs, developers, private wealth and unlisted funds have built a significant track record, execution capability and proprietary knowledge to be successful in destination markets with G7 countries and China absorbing the bulk of the capital. Within that subset, the US and China are grossly overweight, reflecting the allure of strong economic fundamentals which is also reflected in Singapore's external trade basket," added Mr. Kumar.
Globally, Singapore investments remained concentrated in the Asia Pacific region, which accounted for more than 40% of the exposure in 2017. However, some European markets are also increasingly attractive to Singapore-based investors. For instance, Singapore investments into German real estate, which has emerged to be the poster child in the post Brexit world, have surged. The synchronous global recovery will define capital flows this year and European economies, which have largely underperformed since the financial crisis will have the most headroom for growth.
"While market dynamics and global macroeconomics could dictate the allocation of funds, Singapore-based investors are largely long-term investors in real estate and we expect this broad outbound trend to continue to persist. The normalization of monetary policies by central banks is expected to be gradual and conditions will remain supportive of real estate investments globally," said Miss Zialcita.
Source: Real Capital Analytics, Cushman & Wakefield
Note: inclusive of portfolio transactions and standalone investments of >US$25 million in all property sectors
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