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Singapore still top real estate investment market
SINGAPORE is the top market for real estate investment prospects for 2020, according to a report by PricewaterhouseCoopers (PwC) and Urban Land Institute (ULI).
In the report Emerging Trends in Real Estate Asia Pacific, Singapore along with Tokyo, Sydney and Melbourne were named as the top markets as they are “large, liquid, and defensive.”
Ho Chi Minh City was named the top emerging market.
“Vietnam offers strong economic growth, a positive demographic profile, and perhaps most important, is seen as the biggest beneficiary of the slow migration of manufacturing capacity away from China,” the report said.
Manila ranked 17th in investment prospects, up by two points from last year’s ranking; and 11th in development. However, the report flagged current restrictions on foreign majority ownership of domestic real estate assets.
The report also noted that “office-sector vacancies remain low, rents are rising, and capital values continue to grind upwards.”
While Philippine offshore gaming operators continue to drive growth in Manila’s office sector, the report noted the business process outsourcing sector is still the largest office sector tenant with a slow but steady growth.
“Sentiment towards development plays was significantly stronger this year than that for investment,“ it noted, as the government pursues its infrastructure projects under the Build, Build, Build program.
Delfin C. Wenceslao, Jr., national chair of ULI Philippines, said a key takeaway from this year’s survey is that investors are looking at cities that are “liveable.”
“More or less, I think that’s the general theme we are seeing all around. The top countries [in the survey] are investing in things like how holistic a city is, how livable it is, and investing in public infrastructure [and] public space,” Mr. Wenceslao told BusinessWorld after the official launch of the Emerging Trends report on Nov. 27.
Mr. Wenceslao, who is the president and chairman of D.M. Wenceslao and Associates, Inc., noted the Philippines has been making improvements to its infrastructure, although the effects are not immediately felt.
“Investing in long-term infrastructure is a key to make sure that all of our developments are connected, and it’s not going to happen overnight. It’s a slow, steady progress…We won’t see [the effects] one or two years from now; we’ll see it in five to 10 years,” he said.
The Emerging Trends report, which provides forecast on real estate sectors, markets and trends, is based on personal interviews and surveys of 463 leaders in the industry.
A key finding showed investors are now more cautious due to concerns over the trade war between China and the United States.
“That’s the one thing that has hit sentiment the most… It affects basically every country or market in the Asia Pacific in one way or another, usually in the negative sense,” Colin Galloway, ULI’s vice-president of content for Asia Pacific, said in a presentation of the Emerging Trends report which was held at the Grand Hyatt Hotel in Bonifacio Global City, Taguig.
Geopolitical issues such as the protests in Hong Kong and the spat between Japan and South Korea have also dampened investor sentiment.
The report also showed investors are making sustainability a priority, with landlords agreeing “that incorporating sustainable features into their buildings will allow them both to cut running costs and increase rents as tenants become more willing to pay for space that acts as a magnet for talented staff.”
The report also noted business models in the flexible workspace industry, which is found to be the “fastest-growing” component of the office sector, are increasingly being called into question.
However, the industrial and logistics sector is still a bright spot.
“While the Asia Pacific region is still undersupplied with modern logistics space, more investors are now seeking excess returns in subsectors of that market, such as cold storage or last-mile warehouses,” the report added. — Adrian Paul B. Conoza