Investment capital in Singapore, Hong Kong shift to offshore markets

Investors driven off by property curbs.

According to Colliers International, with the impact of various property curbs in the investment market in Hong Kong and Singapore, more investment capital originating from these two locations turned to offshore markets such as China and especially Japan, where inbound purchases doubled over the past six months.

Here's more:

Against a backdrop of uncertainties in the global economic environment as well as weakening economic conditions across Asia Pacific during 2Q 2013, the region is entering an era of slower growth and faces challenges such as the potential risk of liquidity outflow from Asia.

During 2Q 2013, the office sales performance varied across cities in Asia Pacific. Mark Lampard, Managing Director of Corporate Solutions, Asia Pacific, at Colliers International, highlighted that Beijing and Shanghai witnessed a rebound in en bloc sales transaction activity, which was driven by a number of significant deals done by domestic as well as foreign institutions.

In addition, investment demand from institutional buyers looking for scarce prime assets in Australasia remained strong, resulting in a slight tightening of yields.

Meanwhile, the office leasing market in most key cities in Asia Pacific did not experience significant growth, according to the Colliers International Asia Pacific Office Market Overview 2Q 2013.

Out of the 28 office markets in Asia Pacific covered by the report, Jakarta and Manila continued to be the star performers seeing strong rental growth of 4-6% quarter-on-quarter.

However, the absorption in the two markets notably slowed down during 2Q 2013. Meanwhile, the average office rent in Perth decreased the most in the region by 5% since demand softened with the business attitudes turning more conservative in the current global environment.

In tandem with the overall global economic conditions, Asia’s economic environment is expected to remain uncertain.

Over the next 12 months, office rents in the region are anticipated to increase,according to the latest Colliers International Asia Office Leasing Survey, but the pace of rental growth will taper off.

On the sales front, investment transaction volume is likely to consolidate further in the second half of 2013 as risk-averse investors continue to be cautious with concerns of rising interest rates that will lead to higher property yields and reduced property values.