Surge in Investments on Singapore Properties among Foreign Investors: The Debate

Total investments on Singapore properties among international investors surged to S$6.4 billion last year, says property consultancy Knight Frank. However analysts deny this statement, claiming they have seen a decline in foreign investors.

The above amount was nearly double the S$3.4 billion in 2012. The majority of the investments came from the residential segment, but analysts say investors are shifting their focus to hotels and commercial properties.

"The panorama" in Ang Mo Kio by Hong Kong based Wheelock Properties, was one of the top five major transactions by international investors in 2013, standing at S$550 million. This is second to the S$1.1 billion investment on the Grand Park Orchard Hotel by China's Bright Ruby Resources, the Knight Frank research says.

Of the five transactions, three are residential developments: The Panorama, Mount Sophia and MCL's Jurong West project LakeVille. However, analysts say that investments in the residential segment have declined as a proportion of total sales.

"For 2012, residential investments make up approximately 65 per cent of total sales whereas in 2013, it only makes up 49 per cent with more investors looking towards the commercial sector," Ian Loh, head of investment and capital transactions at Knight Frank stated. "There remains a large group of Chinese developers for example, who are still positive about the residential market."

The head of real estate equities at OCBC Investment Research was keen to interject in this debate: "The bias is certainly towards commercial properties, not least because of the many bouts of Government cooling measures we have seen in the last three to four years. The outlook for residential properties over the shorter term is unfortunately negative. There are headwinds for the sector, again due to Government measures that we have seen and also the looming spectra of rising interest rates."

With hotel investments expected to rise this year, Tang Wei Leng, executive director of investment services at Colliers International stated: "For Singapore, there are many stats to support the hotel growth story, with new terminals, new tourist attractions and the Singapore Government's efforts to bring in…business travellers or tourists," he added "The hotel segment is always very attractive. It is a very visible acquisition."

Analysis believe that although there has been a decline, Singapore will remain an attractive investment destination and that local investors still account for the majority of investments made in the country.

The Knight Frank research says total investments came to just over S$27 billion in 2013. International investors made up 23.7 per cent of the total S$6.4 billion, whilst local players accounted for 49 per cent at S$13.3 billion.