Singapore has proven extremely resilient to the covid-19 pandemic and continues to attract capital, even while its local managers expand overseas.
The city-state is home to CapitaLand, the largest real estate investment manager in the region, as well as heavyweights ARA Asset Management, GLP and Mapletree. Constrained by the size of their domestic market (Singapore’s population is 5.7 million), many of Singapore’s real estate investment managers are active overseas, in both the Asia-Pacific region and further afield.
GDP shrank by 5.4 percent in 2020, but is on track to recover that loss in 2021, with growth of 5-6 percent forecast. Singapore appears to have succeeded in staving off the worst of covid, with one of the world’s lowest death rates, while also vaccinating a substantial percentage of the adult population.
Real estate investors are buying into the recovery. Real Capital Analytics data shows transactions of $4.6 billion in the first half of 2021, exceeding the 2020 total of $3.3 billion.
Overseas investors have been particularly busy. RCA data shows the three top buyers in the first half of 2021 were all foreign firms: Blackstone, NPS and Allianz. Demand for office and industrial space has been strong. Residential sales also leaped in 2021. The Q2 transaction total was double that recorded for the same quarter in 2020.
The rise of homeworking has not diminished demand for Singapore office assets, while industrial and logistics space remains to be in demand. Singapore is also an important location for data centers in Asia-Pacific.
While Vietnam has been damaged by ongoing covid restrictions, it is attracting more interest from overseas real estate investors, due to manufacturers continuing to diversify their production. Where manufacturers have a “China plus one” strategy, Vietnam is often the “plus one.” Manufacturers from Japan, Korea and Thailand have opened production facilities in Vietnam, boosting demand for industrial space.
Transaction volume has bounced back in Singapore in H1 2021
The domestic real estate market is dominated by local developers and conglomerates, and foreign private real estate capital tends to invest via joint ventures with them. Overseas investors active in Vietnam include Hong Kong’s Gaw Capital and EXS Capital, as well as US private equity firm Warburg Pincus.
Thanks to a population of 275 million and GDP growth in recent years, Indonesia is considered a market with potential. However, lack of transparency and infrastructure makes it difficult for institutional investors. The real estate market is dominated by family-owned developers and conglomerates.
Investors are waiting for the nation’s “Omnibus Law” to be enacted. This includes measures to open parts of the economy, such as real estate and infrastructure, to foreign investors.