High investor interest boosts Singapore real estate

Resilient market attracts international investment despite the global downturn.

Savills’ latest Resilient Cities Index has ranked Singapore 3rd in real estate investment, placing it just behind Los Angeles and ahead of Tokyo. The city's strong performance comes at a time when global investment volumes have dropped by approximately 48%, making Singapore a standout destination for international investors.

"That was thanks to strength in its real estate investment markets at a time when global investment volumes were actually down about 48% in what's been a very challenging year for real estate investment globally," said Paul Tostevin, Head of World Research at Savills. He highlighted that venture capital investment in Singapore also increased last year, signalling robust investor confidence in the city-state.

Singapore’s stability and security of title make it particularly attractive to cross-border investors. "Cross border share of total real estate investment was steady at about 42% of deals," Tostevin noted. This consistency, combined with strong performance in retail and hospitality sectors, underpins the city’s strategic position as a business and tourism hub. "Top sector last year was retail, accounting for about 42% of deals. And that already plays to Singapore's strategic position as a business hub, a tourism hub," he added.

The number of international visitors to Singapore doubled to 13.6 million last year, and further increases are expected in 2024. This influx of tourists supports the retail and hospitality sectors, further enhancing the city’s appeal to investors.

When discussing the strategies Asian cities should adopt, Tostevin acknowledged the strong presence of Asian cities in the Resilient Cities Index. "Asian cities account for five of the top 20," he said, mentioning Tokyo, Seoul, Singapore, Melbourne, and Sydney as examples of cities with strong higher education sectors and in-migration, contributing to their resilience and attractiveness to investors.

However, Tostevin also pointed out the challenges faced by Asian cities, particularly those outside the top-tier centres. "Pollution is often a big problem for many," he noted, emphasising the need for significant investment in public transport infrastructure and reducing reliance on cars. Housing affordability remains a critical issue, necessitating collaboration between the public and private sectors to boost supply and densify existing areas.

Climate change poses another major challenge, with cities needing to combat urban heat, flooding, wildfires, and extreme weather. Tostevin highlighted the importance of learning from best practices globally and implementing policies and infrastructure to mitigate these risks.

Looking ahead, Tostevin noted the shifting pattern of global growth from west to east, with rapid expansion expected in South and Southeast Asian cities. "We're going to see the fastest growth of cities in South and Southeast Asia, particularly cities in Vietnam, India, the Philippines," he said. These growth hubs, driven by expanding middle-class households and large working-age populations, offer significant potential for real estate development and investment.

However, Tostevin emphasised that established cities like Singapore and Tokyo still have an edge due to their advanced infrastructure and resilience measures. "Singapore is again a great example, investing very heavily in flood defences and water security through infrastructure like Marina Bay barrage," he explained. Additionally, Singapore’s leadership in urban greening initiatives helps mitigate rising temperatures, enhancing its livability and investment appeal.