Asian investors are more confident about real-estate investment over the coming 12 months, boding well for the region’s property market, a survey by global property service provider International Colliers showed.
A large majority of the respondents, 62 percent, indicated they believe Asia’s property markets will improve over the next 12 months, up from 38 percent a year earlier, suggesting a higher level of investor confidence, the annual survey found.
When investors make investment decisions, the region’s economic growth tops their list of concerns, followed by property fundamentals and then political risks, said Simon Lo (盧永輝), the international property consultancy’s executive director of research and advisory on Asia.
Despite the significant increase in confidence, investors are still treading cautiously in the face of possible tightening of the stimulus program in the US and slower-than-expected economic growth in the region.
Almost half, or 48 percent, of the respondents indicated they targeted an internal rate of returns (IRRs) of between 15 percent and 20 percent, while another 32 percent pursued IRRs of more than 20 percent.
“Investors have raised risk premiums in their search for returns due to potential interest hikes and growing worries of tapering of US quantitative easing measures,” said Terence Tang (鄧文傑), managing director of capital markets and investment services.
In terms of investment locations, 50 percent favor their domestic market, followed by 41 percent who favor investing within the region and 9 percent outside the region, the survey showed.
About 42 percent of respondents focus primarily on China, followed by Singapore at 21 percent, Japan at 18 percent, India at 18 percent, Hong Kong at 16 percent and South East Asia at 13 percent, the survey showed.
Singapore emerged as the top-pick city among Asian investors for the year ahead, replacing last year’s leader, Shanghai, which drops to third place after the Indian city of Mumbai, the survey showed.
Tokyo and Hong Kong rank fourth and fifth respectively, the survey showed.
“Expectations of China’s long-term economic growth and appreciation of [the] Chinese yuan remain appealing to investors, while some eye the opportunities linked to the recovery of the office sector in Singapore,” Tang said.
Tang attributed Mumbai’s fast-rising appeal to its role as India’s business hub, the nation’s steady economic growth and the government’s efforts to upgrade the nation’s infrastructure to international standards.
In terms of property, Asian investors favor offices in central locations, followed by residential properties.
For Taiwan, all sectors of the property market stir interest from abroad, especially from investors after value gains, said Andrew Liu (劉學龍), the company’s managing director in Taiwan.
“Government-sponsored enterprises, state-owned enterprises, industrial premises and hotel development projects hold the greatest promise in the local market next year,” Liu said.
In addition, Taiwanese insurance companies, property developers and wealthy families are among the keenest property investors overseas with an aim to expand their business activities or diversify their property portfolio, Liu said.