TIGHTENING credit lines in a highly mercurial environment may manage to squeeze some sweetness out of Asian real estate this year, said Paul Guest, regional head of research and strategy at LaSalle Investment Management, in an interview with BT yesterday.
Highlighting that the dragon year could 'shake loose' some interesting transactions as the liquidity gap widens between assets with access to liquidity and those with limited to no access, Mr Guest expects competition for domestic core assets - defined as long-hold stable income properties - to intensify as feelings of risk aversion mount.
Even Singapore properties, which seem to be stricken with a sector-wide dry spell, was noted to have attractive windows of opportunities in 2012, especially in the core Grade A long-hold office segment.
Addressing concerns over a potential supply glut in prime office space, Mr Guest was quick to say that pre-commitment levels for offices in the central business district have been promising.
'Our analysis of the various projects and data show two projects coming up over the next 12 months of which approximately three-quarters are pre-committed and there is only a project in 2013, of which about 60 per cent is pre-committed,' he said.
In addition, Singapore prime retail space was also highlighted as an option to be considered for its investment returns.
'In Singapore, over a period of five years, you'll get the best return from prime retail at about 4 per cent,' said the property veteran.
'Assuming if you can buy anything on Orchard Road that is,' he quipped.
On other interesting ideas in the Asia-Pacific, mispriced Australian retail assets were highlighted as one of the prime candidates poised for future capital appreciation.
'Headline retail figures have been weak, but non-discretionary spending is strong, making smaller convenience based centres and regional malls with supportive catchments a good investment,' said the real estate investment management firm.
Investment yields - over a 5-year period - are also expected to be the highest for retail and logistics assets in tier-1 Chinese cities as well as office properties in the central districts of Tokyo - coming in at about 10 per cent.
On the other side of the coin, overheated emerging real estate markets were cautioned against, especially those in areas where new construction has been 'poorly disciplined' or where capital is offered too freely.
As at Sept 30, 2011, LaSalle Investment Management had US$8.9 billion of Asia Pacific assets under management.
Source: Business Times – 10 February 2012
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