Singapore total investment spending in non-residential properties doubled to $9.1bn in 4Q 2010

While prime office rents in Asia Pacific are forecast to increase by 6.2% in 2011, property investment sales in Singapore are expected to remain buoyant in 2011.

According to DTZ, Asia Pacific property markets now offer slightly less attractive opportunities to investors than they did previously, with the latest all-property DTZ Fair Value Index (FVI) Q4 2010 for Asia Pacific standing at 57, compared to 65 in Q3 2010. However, the DTZ Fair Value Index shows that, notwithstanding the downgrade in the Q4 2010 scores, Asia Pacific remains attractive globally, boosted by strong economic growth projections and consequently a positive rental outlook. During the fourth quarter, the global Fair Value Index decreased from 63 in Q3 to 53 highlighting an overall trend towards lower expected returns over the next 5 years as yields tighten.

The fall in the Asia Pacific score for Q4 2010 was the result of 16 changes in market classifications with 11 moving from HOT to WARM and one from WARM to COLD. This outweighed four market upgrades from WARM to HOT.

With a score of 60, the office sector continues to offer the most attractive investment prospects with the highest number of HOT markets – this is despite a fall from a score of 70 in Q3 2010. The outlook for this sector remains positive with companies throughout the region expanding their workforces and taking advantage of relocation opportunities.

Ms Chua Chor Hoon, Head of South East Asia Research said: “In Singapore, the commercial and industrial sectors continue to be in the HOT classification in Q4 2010. Rents which bottomed in 2010 are on the uptrend in line with economic recovery. Total investment spending in non-residential properties doubled for a second consecutive quarter to $9.1bn in Q4 2010, making up 77.1% of total investments in the quarter. Property investment sales are expected to remain buoyant in 2011, with more major deals and foreign investors. The main constraint will be the availability of prime assets for sale.”

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