A favourable business environment, growing regional momentum and a supportive ecosystems are leading more global, institutional investors to set up shop in Singapore, at the same time that the city’s limited real estate market pushes investors to shop for assets overseas, according to senior executives from ESR, Sun Venture, JLL and MSCI speaking at the Mingtiandi Singapore Forum on Tuesday.
“You look at the direction of travel and all of these international investors that have invested now in opening offices here to deploy in Asia — like AIMCO, Harvard, QIA and Cadillac Fairview — all of their offices have been opened in Singapore in the last two to three years because this is the long-term destination for capital,” said Josh Daitch, group chief investment officer at ESR.
The city-state has also benefited from a reconfiguring of geographical priorities as the world emerges from the pandemic, according to David Green-Morgan, global head of real assets research at data provider MSCI, who was speaking at the panel sponsored by Yardi.
“And when you look at the number of global institutional offices that we have in Singapore now, not just focused on real estate, but (also) equities, fixed income, the ability to deploy capital from Singapore to a greater number of countries has benefited,” Green-Morgan said.
At the same time that more global institutions set up in Singapore, investors from the Lion City continue to play a larger role beyond its borders, according to Jeun Jye Ong, head of real estate with local investment firm Sun Venture, which has acquired assets in Australia and London in recent years.
“By design, Singapore’s a small market (and) if you want to grow and expand beyond a certain point, you have to go overseas. And some of these English-speaking markets… are very, very attractive for us,” Ong said.
After acquiring commercial assets in the UK and Australia, Sun Venture is now diversifying its investments into hotels and living sectors, Ong said.
Investors from the city-state have become one of the most active real estate investors globally with a focus on assets in developed markets, like Europe and the US, according to David Green-Morgan, global head of real assets research at MSCI.
“Post-GFC (Global Financial Crisis), the repricing that we’re seeing in Europe and the US is maybe proving to be slightly more attractive,” Green-Morgan told the panel.
“At the margins, obviously we’ve seen a lot more capital go to India, parts of Southeast Asia, Japan, Korea, as well as Australia, which has kind of over the last 20 years become more of a hinterland for Singaporean investors,” he added.
Data from MSCI showed Singapore-based investors deployed $7.6 billion in cross-border transactions in Asia Pacific in the first nine months of 2023, making the city-state the top source of foreign capital in the region.
Family Offices Rising
Kian Jin Khoo, head of private wealth for capital markets in Asia Pacific at JLL, noted that private wealth in Asia has become a major source of capital globally, with the region accounting for 30 percent of the combined fortune of ultra-high net worth individuals globally, with around $12.8 trillion held by families in the region.
With interest rates rising and, as private money often has a longer investment horizon than institutional investors, Khoo said family offices are increasingly focused on value-add and even distressed opportunities, like the US office market.
“Private wealth capital is actually very different from institutional capital in terms of how they think and rationalize a lot of these investments, especially as it relates to real estate. A lot of times they look at it as generational investments,” Khoo said.
“That (investing in the US office market, for instance is) not something that a lot of institutional capital necessarily is looking at, but because of their long term nature, they (ultra rich investors) are saying ‘I can wait five, ten years, I can ride this wave of volatility,” he added.
China Interest Endures
Turning to China, Shirin Tang, managing partner at law firm Morrison Foerster Singapore, asked the panel for their views on the shrinking of capital into the mainland property market.
ESR’s Daitch said a large percentage of foreign investors have stopped pouring additional investments into the country due to rising geopolitical risks, but very few investors are in a rush to sell down or totally exit existing holdings.
“2024 should be very, very interesting from an opportunity standpoint for investors looking to pick some stuff up cheap in arguably the largest contributor to GDP in the world,” he said.
Backing Daitch’s point, Green-Morgan from MSCI added, “We shouldn’t just see everybody completely turning their back on China… it’s still the main driver of economic growth for the whole region. We’re all linked to China’s prosperity one way or another.”