Singapore is the second most preferred city in Asia-Pacific for cross-border investments this year, a study noted yesterday.
Known as the CBRE 2021 Asia Pacific Investor Intentions Survey, it cited logistics as the most popular sector for investors while interest in the office sector has weakened. The findings come as the Economic Development Board reported that Singapore attracted about $17.2 billion in fixed asset investments last year amid the pandemic.
“Singapore remains an important hub for foreign corporations looking to access South-east Asia,” said Mr Desmond Sim, head of research for South-east Asia at CBRE, a global commercial real estate services company which commissioned the survey.
“Although the central business district rents declined in 2020, rents are forecast to display growth over the next three years, supported by low vacancy and strong demand.
“In fact, we expect office demand in 2021 to be fuelled by Chinese technology firms and non-bank financial services firms such as investment managers and hedge funds,” he added.
The report noted that Singapore is emerging as a viable alternative to Hong Kong among companies establishing Asia-Pacific headquarters. Tokyo topped the study due to the availability of high-quality assets and strong liquidity. Seoul came in third, followed by Shanghai and Ho Chi Minh City. The survey polled 492 investors, who were mainly based in Asia-Pacific, between Nov 9 and Dec 14 last year.
Respondents were asked about their buying appetite and preferred strategies, sectors and markets for this year.
The study revealed that there was broad-based improvement in market sentiment, with 60 per cent of investors intending to buy more real estate, the highest level since 2016.
“The recent commencement of vaccination programmes in several countries around the world has further boosted market confidence,” it noted.
But interest in the office sector, which used to be the most popular for investors, dipped with the rising adoption of remote working. Demand for retail and hotels also remained soft, the report added. However, some opportunistic investors are still considering hotels as counter-cyclical plays, particularly in countries with strong domestic tourist markets such as Australia and Japan.
Meanwhile, logistics came up tops as the most popular sector for investment, as the pandemic drove the acceleration of e-commerce, boosting demand for this asset class, the report said. Investors were also more interested in data centres, as demand surged for video conferencing and other platforms to support remote working. This has led to increasing requirements for data storage. The report added that there was a growing number of investors including environmental, social and corporate governance (ESG) criteria in their decision-making.
“Nearly half of respondents, most of which came from Singapore, Australia and western markets, stated that they had already adopted ESG criteria in their investment strategies,” it noted.
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