Singapore attracted an eye popping 90 % of all property investment in SE Asia in Q1 2011

Total transaction value for the region fell 44.1% q-o-q to US$6.1 billion in Q1 2011.

According to DTZ Research, the Q-o-Q drop was registered across the three countries - Malaysia, Singapore and Thailand.

Singapore accounted for the bulk or 91.9% of the region’s total investment value in Q1 2011. Thailand’s share of 5.2% amounted to US$316.0m while Malaysia made up the remainder with US$175.6m.

The number of deals that exceeded US$100m fell from 23 in Q4 2010 to 18 in Q1 2011. All deals above US$100m were made in Singapore, with the sale of sites from the Government Land Sales (GLS) programme forming the bulk of the larger investments.

The bulk of foreign purchases were in Singapore, which accounted for 92.0% of total foreign purchases. Asian investors continued to be the biggest players in the region. Intra-ASEAN investments accounted for about a third of foreign investments value while an estimated 41% was from other Asian investors.

Save for the hotel sector, investment spending for all sectors fell in Q1 2011. Interest in hospitality properties has been rising in the region, particularly in Thailand and Singapore, due to bullish prospects in the tourism sector.

Foreign participation also fell in Q1 2010, making up 11.8% of total investment value in the quarter, down from 16.0% in Q4 2010.

Investments in hotel properties in the region were mainly made by listed trusts, which accounted for over half of the hotel transactions. Thailand accounted for the bulk of these transactions, as two property funds debuted on the Thai bourse in Q1 2011. CDL Hospitality REIT also acquired Studio M Hotel in Singapore in the same period.

“We expect property investments in the region to pick up for the rest of the year, due to optimism in SEA’s growth prospects. Singapore being a key city in the region with good economic fundamentals will continue to attract investments. Development initiatives, from Malaysia’s Economic Transformation Programme as well as the establishment of the REIT structure in Thailand will also boost property investment opportunities in the region,” said Ms Chua Chor Hoon, DTZ Head of SEA Research.

In Singapore, the sale of state land will form a significant portion of investment transactions as developers buy to replenish their landbank. Acquisitions by REITs are expected to feature prominently in the coming quarters as well, from new listings as well as existing ones that are looking to expand their portfolios.