Singapore nabs US' spot as largest investor in APAC real estate

Investors injected almost US$8.5b into APAC real estate.

Investors in Singapore injected over $11.6b into Asia-Pacific, surpassing the US' position as top source of APAC real estate investments for the first time.

"This brings Singapore's cross-border investment value to surpass that of the US by nearly 50%," read the statement from Knight Frank.

This stemmed from the strength of the Singapore dollar, which prompted large institutions such as GIC and other Government-Linked Firms to pursue markets such as Japan, China, South Korea, and Australia. 

Notably, GIC is consistently growing allocation to the real estate asset class, with investments in the US now accounting for over 22.4% of the total inbound investment volume from Singapore.

Meanwhile, growing interest in assets linked to the new economy marked the third quarter of 2023 for the commercial real estate market in the APAC region. 

Investment activity shrunk by 53.4% year-on-year, reflecting a noticeable hesitation among both domestic and international investors to engage in the current high-interest rate environment. 

The narrowing of yield spreads has reached a point where certain markets are experiencing negative risk premiums.

Christine Li, the Head of Research for Asia-Pacific, said a growing portion of cross-border capital from APAC is channeled into data centres and industrial properties.

"Industrial properties benefit from a combination of limited supply of institutional-grade assets and sustained long-term demand from e-commerce, life sciences, and technology sectors, which are fueling investment interest," said Li.

Canada share

Canada also attracted the largest share of outbound investments from APAC, outpacing the US, for the first time. Canada secured a significant 42% share of APAC outbound investments, with the United Kingdom, following at 26%, and Germany at 10%. 

This shift was accompanied by an eighteenfold increase in deal volumes from APAC to Canada, which was at US$1.02b, primarily driven by investments in data centre opportunities.