Singapore landlords build world empires with bond sales: Bloomberg

The home country is such a small playing field.

Singapore landlords are tapping the fourth-lowest local borrowing costs in Asia to fund record overseas purchases of hotels, office blocks and luxury apartments as property prices fall at home.

According to a report by Bloomberg, CapitaLand Ltd.’s (CAPL) Ascott Residence Trust and Malaysian tycoon Quek Leng Chan’s GuocoLand Ltd. were among real estate companies that sold the equivalent of $4.98 billion of Singapore dollar-denominated notes in 2014, the most for the same period in any year, data compiled by Bloomberg show. The island’s 10-year government bond yield has tumbled 29 basis points since Dec. 31 to 2.25 percent, the lowest rate in Asia after Japan,Taiwan and Hong Kong.

Singapore developers have spent more than $9.8 billion on foreign purchases this year, almost double the same period of 2013, snapping up real estate from malls in Beijing to luxury apartments in Sydney and London. The island’s house prices fell 0.7 percent in the third quarter and shop values dropped 0.2 percent, the Urban Redevelopment Authority said last week.

Property companies’ “upside potential is limited in Singapore amidst an increasingly challenging operating environment,” said Yvonne Voon, an equity analyst at Credit Suisse in Singapore. “The lower cost of funds in Singapore has allowed local corporates to bid more competitively for overseas acquisitions, particularly in higher-yielding markets like Australia and the U.K.”

View the full report here.