Aggressive Chinese developers set sights on robust local office market

Don’t have high hopes for the residential segment.

The Singapore office market will continue to attract investors in 2015 and an under-supply of new office space will support healthy occupancy rates, as well as rising rents and prices.

Colliers notes that the residential property sector in Singapore has been having a tough time, with the transaction numbers and prices falling for some time. Investors will be keeping an eye out for good-
value opportunities, especially in the luxury segment.

Chinese developers will be particularly aggressive in acquiring assets. Chinese developers and insurance companies will likely build on the US$9.5 billion in outbound investment from China in 2014, which showed an increase of 7%. Meanwhile, inbound investment into China is expected to fall further from US$23 billion, which was already down 27% over the previous year.

“The slowdown in the market has encouraged sellers to reduce their asking prices, which may generate more momentum in the year ahead, compared to what has certainly been a lacklustre 2014. There should also be some interesting development sites coming onto the market in Singapore in 2015, and capital-market activities should then increase. It is likely there will be more international investors, particularly private-equity groups from North Asia and European pension funds,” said Terence Tang, Managing Director of Capital Markets & Investment Services--Asia, ColliersInternational.

The likelihood of an interest-rate hike in 2015 will give some investors pause for thought. But Colliers does not expect rates rise either soon or fast. As a result, the overall environment for borrowing for real-estate purchases remains near a record-low, giving continued impetus to capital markets around Asia. 

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