Singapore property cooling measures to help propel outbound investments from Asia

A major "push" factor in 2014.

Asia's real estate investors will spend more in a wider range of geographical locations and property sectors outside the region in 2014, according to Collier's International, as they forced by cooling measures by governments in Singapore and Hong Kong to consider investments abroad.

"Besides increasing global liquidity, the volume of outbound investments from Asia is being driven by both 'pull' and 'push' factors," explains Piers Brunner, Chief Executive Officer, Asia at Colliers International.

"The main 'pull' factors are the higher yields available in the prime gateway cities of the US, Europe and Australia, the growth potential of property there, and the high level of transparency.

"The 'push' factors are the likelihood that the governments of Hong Kong and Singapore will keep existing local real estate cooling measures in place this year, and the relaxation of government policies concerning overseas real estate investments in Asian countries," he adds.

"Chinese outbound property investments beyond Asia really took off in 2009, and they reached US$9 billion in 2013. We believe more Chinese developers will look overseas to support the needs of their local clientele," says Terence Tang, Managing Director of Capital Markets and Investment Services, Asia at Colliers International. "We think the world's 'gateway' cities will see a quantum leap in real estate purchases by Chinese buyers in 2014."

Meanwhile, South Korea is another Asian country catching up in terms of growth. The country's annual volume of outbound property investments increased by more than half in 2013.

The Colliers report describes the first two waves of outbound property purchases by Asia's investors since 2000. The first wave targeted quality real estate in London and Sydney. In the next wave, investors are expected to expand their scope of interest to the fringe areas of gateway cities, such as London East and downtown markets in Manhattan, where investors will find prices more attractive than those in traditional core locations. Meanwhile, the gradual economic recovery and growing investment demand have begun to increase the popularity of commercial real estate.

The emerging trend will see outbound investors entering non-traditional sectors and committing to value-adding schemes, including conversion and development opportunities, in the secondary locations of gateway cities, says Colliers.