Singapore kicked out of top 30 global real estate markets as weary investors exit

Investors are now avoiding Singapore.

The sluggish property market was treated to another painful blow today. Singapore dropped out of the world’s top 30 real estate markets for 2015, a straight drop from ninth place last year.

According to PwC and the Urban Land Institute (ULI)’s Emerging Trends in Real Estate Asia Pacific, Singapore’s slip in the 2015 rankings is the result of the introduction in 2013 of government measures to curb price increases in Singapore’s residential market, which have weakened investor enthusiasm.

While prices have held steady in general, both residential and commercial transactions have fallen significantly, “as both foreign and international investors turn to foreign markets to look for deals,” the report says.

The common theme is that investors are avoiding stagnant capital values and some of Asia's most compressed cap rates. With rental growth pegged at 15.9% year-on-year, yields in Singapore are now moving out.

According to one Singapore-based fund manager, "The issue for sellers is securing the pricing they want, and all of that comes down to liquidity, which has been very low." One reason is that "there has been a reallocation of capital moving to Americal or other places here in Asia."

This has been fueled not only by relatively unattractive pricing of SIngaporean assets, but also by the fact that local developers have access to some of the lowest borrowing costs in Asia, which they are using to fund record purchases of overseas assets.