Global investors are showing a lot of interest in Asia because of the region’s strong economic fundamentals, reports UMA SHANKARI
THE future for investment markets across the world is mixed, but Asia should emerge from the current turmoil as the most attractive location, property analysts say.
Coming off the sub-prime crisis in the US, global investors are showing a lot of interest in Asia because of the region’s strong economic fundamentals and problems in other markets.
According to Donald Han, managing director of Cushman & Wakefield (C&W), 20-30 per cent of the investors looking at Asia have dropped off since the sub-prime crisis – but the rest are still interested.
‘If there were 10 investors looking at an allocation of assets into Asia before the sub-prime problem, now there are six or seven still looking,’ he said.
Ong Choon Fah, executive director and regional head of consulting and research at property firm DTZ, agrees.
‘Concern over the US and global economies, as well as the credit squeeze, will continue to impact sentiment in the investment market,’ she said. ‘But prospects remain cautiously optimistic as institutional funds look towards Asia for growth opportunities.’
Citigroup economists Huang Yiping and Chua Hak Bin pointed out similarly – in a recent note – that capital inflows into Asia could increase because of the region’s robust fundamentals and resilient growth.
This growth is set to continue. Asian Development Bank president Haruhiko Kuroda said recently he sees Asia’s growth overall growth moderating to only 7.5-8 per cent this year, from 8-8.5 per cent last year.
But the difficulty of finding good stock to invest in, combined with different regulatory and property rights regimes in different countries, remains a challenge for investors looking at Asia, a recent report from C&W noted.
‘The majority of office stock in most Asia countries is owner-occupied,’ it said. ‘Compared with London and New York, the proportion of investment stock is low. Even Tokyo, the largest market in Asia, is only one third the size of London or New York by floor area.’
Development opportunities in Asia also vary greatly from country to country, and regulations governing foreign investment can change at short notice. China, for example, restricted entry to its real estate market in June 2007 in a bid to avoid hot foreign money creating bubbles in its property market.
Foreign investors now have to establish a real estate company before they can invest in a China project. Establishment, however, is heavily restricted, and investors cannot bypass regulations by acquiring or controlling a domestic real estate company.
But difficulties for foreigners in developing markets may mean increasing interest in Singapore and Hong Kong, which are perceived as easier Asian cities to invest in, C&W believes. Relatively transparent property rights and land registration systems – compared with other Asian cities – mean lower risk.
However, there is a downside of certain classes of investor – especially those with high gearing – falling by the wayside in amid tight credit markets.
For example, the lending squeeze has meant that traditional buyers such as real estate investment trusts (Reits) are holding off.
Reit managers in Singapore and the rest of the world have been growing their portfolios by using cheap credit.
But now, amid a volatile climate and liquidity squeeze, they are finding it more difficult to raise new funds by way of debt or equity, according to DMG & Partners analysts Terence Wong and Brandon Lee.
‘Most notably, rising capital values of properties and higher costs of capital cannot only erode yields, but also lead to dilutive acquisitions,’ they said in a recent note.
C&W’s Mr Han reckons the pace of collective sales will also slow. ‘The en bloc market will be a little quieter this year. It is yet to be seen if vendors will become more reasonable when it comes to pricing their properties, which will make them more attractive to buyers,’ he said.
This could have an significant impact, especially in Singapore, where investment sales in 2007 were boosted by active Reit-related acquisitions and buoyant collective sales in the first half of the year.
‘Investment sales in Singapore and Malaysia increased, driven by strong interest for income-generating buildings and the listing of several new Reits in 2007,’ said DTZ. ‘They were also boosted by strong collective sale of residential properties in Singapore during the first half of 2007.’
Although sentiment has turned, there are still buyers in the market. ‘In the US, there are mainly sellers, not buyers,’ said C&W’s Mr Han. ‘Here, there are still buyers looking to put money into Asia, as the potential for growth remains.’
In particular, investors with stable income – such as pension funds – are likely to be keen on Asia, analysts say.
Strong fundamentals mean the investment market will continue to do well in 2008, they believe.
For example, strong bidding at recent government sales of mass-market residential sites in Singapore shows there is still demand, Mr Han notes.
And DTZ believes investors in Singapore are likely to look towards non-traditional asset classes as yields of ‘core’ and ‘core-plus’ investment assets continue to compress.
Source : Business Times – 1 Apr 2008
Making the city more dense and compact
Posted by luxuryasiahome on April 1, 2008
MALONE-LEE Lai Choo, director of the environmental management programme at the National University of Singapore, is no stranger to city planning. Prior to academic life, she headed the conservation division at the Urban Redevelopment Authority and was deputy director of strategic planning and the Ministry of National Development.
In a paper, Dr Malone-Lee and co-author Chua Yang Liang, head of research (South Asia) at Jones Lang LaSalle, argue that changing circumstances – a growing and ageing population, immigration, wider income gaps and a drive to resource efficiency – will challenge traditional planning frameworks.
Business Times: In the paper, you say ‘the planning ideology of technical rationality that emphasises economic growth, spatial order and functional efficiency has been the predominant paradigm’ but this top-down approach needs to evolve into one that draws on local community initiatives. What do you mean by local initiatives?
Malone-Lee: We have to go back to incremental and adaptive thinking. Instead of the big-bang approach – of having a big organisation to plan and design the whole solution all the time – we can look at alternative ways – say there are 10 guys, smaller entities, who understood the local problems and work something out in different ways, perhaps not systematically, but the problem could still be solved in the end, with probably more interesting and varied outcomes.
When you break down something big into smaller components, it may seem chaotic, but some order will emerge if your ultimate goals for the country are congruent.
BT: What’s wrong with traditional approaches?
ML: Traditionally we’ve used the ‘predict-and-provide’, ‘more-of-everything’ model when population and the economy grow. New towns on greenfields, the use of undeveloped land, more roads, more shopping centres, etc.
Now, in European cities, people are rediscovering city centres, converting rooftops, moving back. For example, in Berlin, they turned old areas like single-storey houses and bombed-out areas into cluster housing and in the end only added 10 per cent of the required development on greenfield land.
You can already see this type of thinking partly evolving in Singapore’s plans:
In the 1991 Concept Plan, we talked about needing ‘x’ number of Ang Mo Kio’s. In the 2001 Plan, it was not about adding new towns but making familiar places better, and increasing densities.
But Singapore’s urban planners are always hedging. They have not fully embraced the idea of no more new towns on greenfields until all possibilities of development within existing areas have been exhausted.
BT: Higher densities – can Singapore absorb this?
ML: When we argue that the city can be more dense and compact, people usually counter that it is already very crowded. I think the idea is to be more efficient and optimal in our allocation of density.
Maybe, for example, taking things to different levels, like having a multi-layered city with walking on street as well as upper levels, and densely compact activities around public transport nodes.
And connectivity – we’ve never planned a pedestrian-oriented city, so most people drive in, and much of the city land has to be devoted to road space for cars.
But we have a good MRT system. If we improve links to the stations and bus stations with covered footpaths, overhead bridges or underground links, and focus on mobility of people within urban spaces, we would not have that sense of crowdedness.
BT: Presumably this whole movement requires a mindset change?
ML: We live in a planned city. We do not have a random sprouting of land uses. This has its merits as we avoid certain environmental impacts. But sustainability is not just about building a new city such as the Masdar City in Abu Dhabi or eco-cities in China. It is also about retrofitting a city, which is much harder.
We still have opportunities to do something different, particularly at the urban fringes, like Balestier, Whampoa, Lavender or Rochor, which already have mixed uses – opportunities to allow these places to develop their own symbiosis.
Let Greenwich (a New York neighbourhood) develop out of Balestier. As it is, the land use pattern is not pristine, so additional mixed users will not make it worse. These are some areas where you can let local initiatives take off – albeit with minimum regulations to safeguard things like public health and the environment.
BT: What are the hindrances?
ML: Sometimes zoning guidelines hinder local initiatives. Take, for example, the Bollywood farm-cafe run by Ivy Singh-Lim at Lim Chu Kang. If the restaurant is not allowed on zoning grounds, the viability of the farm could be affected.
BT: How could planners address this?
ML: Perhaps finer-grained zoning, rather than traditional zoning with its big chunks of specialised land use.
Integration allows users, for example, within a big area of residential land, to subdivide it into smaller parcels, for schools, restaurants, light industries or a bus interchange, all at close proximity.
Singapore is already doing that in some areas like One-North, where there are many activities – restaurants, research facilities, infocomm offices, creative industries, condominiums – within a small area.
At the building level, you can have many uses within a single complex.
The Pinnacle@Duxton is a good example. The concept is exciting – you don’t need shops on the ground floor and apartments for 30-40 storeys above, but rather have more mid-level decks where you have, for example, a clinic, supermarket, gym or other amenities, so people move less for daily or basic needs.
When a single multi-storey complex has mixed uses, transport is verticalised within the complex, instead of horizontal.
BT: What are your thoughts on malls?
ML: There is a limit to putting in more of the same kind of shopping malls as far as the retail environment is concerned.
However, the tendency is that in time, large developers will go in and buy up many of the fringe areas, especially if they become vibrant. We may need to protect these areas, such as by allocating large sites elsewhere or having guidelines to keep the developments small, say in four to six-storey dense clusters.
I am in favour of market forces – our real estate industry can only respond to demand – but the question then is how to provide for the diverse smaller groups or individuals, with more alternatives where rental is more moderate.
BT: Are you suggesting that there should be fewer shopping malls?
ML: A lot can be said for home delivery for daily needs – some supermarkets like Cold Storage have on-line facilities and deliver daily necessities to your doorstep.
Then, if people go to the supermarket just for specialities, developers and retailers will change their planning and marketing methods to focus on these. You might then need less space for the big supermarkets, which consume a lot of energy, and need huge space for car-parks or other attendant uses such as on-site storage.
Smaller shops can then compete by getting more specialised in niche areas. For example, we are beginning to see shops selling organic food, Manuka honey, or wine, in places like Bukit Timah and even HDB estates.
Neighbourhood shops are the most environmentally responsible way to go. The concept is to reduce travel distance and encourage walking.
Source : Business Times – 1 Apr 2008
Posted in Comments / Features, General, Masterplan | Tagged: Urban Planning | Leave a Comment »