Policy-battered property assets still draw investors to Singapore

The property investment market will be active this year.

There’s no stopping institutional investors from snapping up Singapore properties despite the current weak occupier market, according to a report by CBRE.

CBRE said the current market still presents windows of opportunities for buyers. As more purchasing activities by institutional investors and property funds were observed in 2015, CBRE said that the trend is set to continue in 2016.

“Clearly, there are more opportunities for occupiers in this current climate. But what’s emerged is that opportunities are available for investors with a long term view; the current market may present good quality stock with attractive pricing,” said Desmond Sim, Head, CBRE Research.

The report noted that as the price mismatch between buyers and sellers continue to remain one of the major hurdles in concluding a deal, investment sales in 2016 will be contingent on efforts between buyers and sellers to bridge the bid-ask spread.

Funds may implement asset enhancement initiatives in this period and re-launch the assets when the occupier market eventually recovers, the report noted.

As interest rates rise, the higher cost of funding could prompt investors to consider various funding options, such as hybrid instruments.

“The market will have to digest more data to assess the full impact on pricing and volumes. Real estate is a long term play. Once we are able to ride out the current patch, real estate will probably outperform the previous cycle,” Sim said.