It has been reported that Hong Kong investors have invested a total of US$1.4 billion into Singapore’s real estate in the first six months of 2019. This amount is more than a quarter of the total outbound real estate investment from Hong Kong - a sum of US$5.2 million - for the period. This means that Singapore is the top destination for Hong Kong investors. The figure, though, reflected a drop of 31 per cent in total outbound investment overseas year on year.
It should be noted these investments largely happened even before the on-going protests which have been riling the China Special Administrative Region (S.A.R.).
Analysts expect that interest in Singapore’s property will maintain or even increase, given the political turmoil in the territory does not seem to have abated since it started more than three months ago, though there may be hope with Chief Executive Carrie Lam’s latest announcement on the four steps that the Hong Kong government will be taking in the hope of bringing peace to the city, including the complete withdrawal of the controversial extradition bill. More people may view Singapore as a safe haven given the challenges that some other potential investment destinations around the world are facing.
It was also reported that some of these investors and funds have been active in Singapore for some time, but the political situation in Hong Kong has coincided with more high-net-worth individuals and family offices from the territory making enquiries on Singapore properties.
The second most popular destination for Hong Kong investors was the United States with almost US$1.2 billion invested, followed by the United Kingdom and Japan with US$900 million and US$850 million invested respectively.
Some of the more significant transactions in Singapore include the S$170 million purchase of the Robinson 77 office building in February by Hong Kong private equity firm Gaw Capital Partners (GCP).
In a sale confirmed in July, GCP also led a consortium which included insurer Allianz, to buy the Duo office and retail space for S$1.575 billion. And most recently, fund manager Arch Capital Management complemented the purchase of Anson House, another office building, for S$210 million. Besides commercial assets, Hong Kong investors have also shown interest in Singapore’s retail market.
In addition, Singapore’s commercial real estate has also attracted the attention of buyers from mainland China, as their traditional investment destinations such as the US and the UK have been affected by the rising trade tensions and the persistency of the uncertainty surrounding Brexit.
This comes as mainland Chinese overseas real estate investments dropped by 68 per cent year on year to a seven-year low of US$3.8 billion during the first half of 2019. This is due to restrictive outbound investment policies and a tightening lending environment as well as heightened global economic uncertainty. Analysts expect that, for the rest of 2019, Chinese investors are likely to maintain their interest in Australia as well as countries linked to the Belt and Road Initiative.