Hong Kong's property investment in Singapore hits $1.9b in H1

Key transactions include Gaw Capital’s purchase of Robinson 77 for $710m.

Hong Kong investors deployed $1.94b (US$1.4b) in Singapore commercial real estate with the value of transactions hitting $4.17b, according to a report by Cushman & Wakefield (C&W).

Accordingly, the island-state’s stable political environment and relatively strong office rentals lured investors.

Also read: Property investment sales soared 49.2% to $7.26b in Q2

Key transactions include Hong Kong investor Gaw Capital Partners’ purchase of Robinson 77 for $710m in February. Gaw Capital also led a consortium including Allianz to buy DUO office and retail space for $1.58b. Another Hong Kong investor, Arch Capital Management completed the purchase of Anson House at $210m in August.

“Some of these Hong Kong investors and funds have been active in Singapore for some time but the advent of the political situation in Hong Kong has coincided with more high net-worth individuals and family offices from Hong Kong enquiring on potential purchases,” said Christine Li, head of research for Singapore and Southeast Asia.

“Singapore started to attract increased attention from Hong Kong investors and may increasingly be viewed as a comparatively safe haven given the challenges some other global destinations are facing,” added James Shepherd, head of research for C&W Asia Pacific.

Overall, Hong Kong overseas real estate investments fell 31% YoY to $7.22b in H1 as downward pressures continued to mount. This is the sixth consecutive quarter that outbound investments from Hong Kong fell in terms of YoY growth compared per quarter, with only $3.2b billion worth of deals in Q2.

Also read: Singapore defies real estate investment decline as Q2 transactions hit $4.02b

C&W also noted an increasing interest in Singapore’s retail assets by Hong Kong investors with the recent acquisition of Chinatown Point Mall by Pan Asia Realty Advisors, a joint venture between Mitsubishi Estate and Hong Kong-headquartered CLSA Capital, for $520m.

Apart from Hong Kong investors, Mainland Chinese buyers have also started putting Singapore on their radar for commercial assets. The Place Holdings, backed by China’s The Place Investment Group, recently bought Realty Centre for $148m from a commercial collective sale deal.

The deal came amidst the mainland Chinese real estate investment overseas (MCREIO) plunging to a seven-year low of $5.28b in the first half of 2019, falling 68% YoY due to restrictive outbound investment policies and a tightening lending environment.

“H1 2019 MCREIO transaction volume fell to its lowest point since 2012. Traditionally favoured destinations such as the US and the UK have remained quiet as trade friction and Brexit uncertainty has rolled on,” noted Shepherd.