Still no place like home: 70% of investors averse to expanding their portfolios abroad

Singapore and Hong Kong are the only Asian countries attractive to 30% of investors prepared to venture outside their local markets, a new survey revealed.

Colliers International’s Global Investor Sentiment Survey for 3Q 2010 reported that despite the growing optimism in the global real estate market, investors are interested only in their respective domestic market when looking to expand their real estate portfolio .A large majority of the respondents believe that their domestic market would be on the upswing in the next 12 months – characterized by increasing demand, falling availability and vacancy, and rising headline rents.

Investors willing to grow their portfolios elsewhere indicated Chicago, London, New York, San Francisco, Sydney and Washington as their preferred cities. Emerging markets mentioned included Brazil, Poland and Ukraine.

Confidence across the regions is reinforced by nearly three quarters of the respondents believing that a
double-dip recession in their region is unlikely, while 60 per cent of the investors worldwide indicated that they are looking to expand their real estate portfolios in the next 12 months.

The Colliers International Global Investor Sentiment Survey1 3Q 2010 was conducted from 15 August
2010 to 7 September 2010, with participation from more than 200 major institutional and private investors worldwide with a combined investment portfolio of some US$710 billion.

Positive Investment Sentiments in Asia

According to investors in Asia, the average time on the property clock2 in 3Q 2010 is slightly past 7 o’clock, compared to 6 o’clock in 1Q 2010. Looking ahead in the next 12 months, the average clock time in Asia is predicted to move towards between 8 and 9 o’clock, with the greatest number of respondents (23 per cent) placing the time at 9 o’clock.

A vast majority (75 per cent) of the respondents in Asia revealed that they do not think that the region is heading for a double-dip recession, as they think the governments will step in to prevent any crisis from developing.

Mr Piers Brunner, Chief Executive Officer, Asia, of Colliers International says, “The Survey shows that Asian investors are confident of the macro-fundamentals in the region. Personal and corporate debt levels are low, while interest rates are low and liquidity is high. However, there are concerns among Asian investors, such as the uncertainties on the government policies to cool the over-heated markets, change in market liquidity and interest rate increases.”

Nonetheless, 73 per cent of the investors in Asia are now considering to expanding their property portfolio in the coming 12 months, compared to 65 per cent in 1Q 2010.

The desire to purchase property in Asia among Asian investors continues to rise, with 91 per cent expressing a desire to buy property in their domestic region, compared to 78 per cent in 1Q 2010. The high percentage of Asian investors looking to increase their exposure in their domestic markets can be attributed to the growth expectations in Asia, primarily driven by the Chinese market.

Meanwhile, 59 per cent of the investors in Asia reported a desire to buy overseas properties. Singapore, Hong Kong and Shanghai are the most-preferred hot spots for Asian investors looking to purchase office space over the next 12 months.

Mr Dennis Yeo, Managing Director of Singapore, Colliers International, says, “Singapore joins Hong Kong and Shanghai as the top choice for investment activities in the region comes as little surprise, given Singapore’s stable economy and conducive business environment.

In fact, in 3Q 2010, there was already a strong signal of investors’ growing confidence in the mid-term prospects for commercial properties. Commercial and mixed-commercial properties chalked up a substantial S$3.63 billion worth in investment sales value, accounting for 38.5 per cent of the quarter’s total investment sale value. This is a significant increase from the S$2.55 billion garnered in 1H 2010.”

Individual investors across Asia reported their intention to pursue residential investment opportunities in second-tier Chinese cities such as Nanjing and Hangzhou. Other overseas investment opportunities eyed by Asian investors included Sydney office and Brisbane retail assets, as well as office properties in New York and Chicago.