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UK house prices resumed their decline, with Nationwide Building Society warning that headwinds for property sellers are increasing.
UK mortgage approvals fell unexpectedly, and borrowers repaid debt at a historic pace after soaring interest rates increased the cost of serving loans.
China’s manufacturing surveys this week provided contradictory signals of factory activity in May, suggesting the outlook for the world’s second-largest economy remains uncertain and policymakers may need to do more to spur growth.
After more than 20 years, British Land’s time in the prestigious FTSE 100 index is coming to an end, falling victim to the turmoil rising interest rates are causing in the commercial property market. It’ll be replaced by IMI Plc, the Birmingham-based engineering company. It also means Ocado, whose shares have fallen as the cost-of-living crisis squeezes its customers, has narrowly avoided demotion.
Vietnam builders have suspended more than 1,200 real estate projects worth 800 trillion dong ($34 billion) as funding woes continue to beset the industry.
Jan 16, 2022
, Bloomberg News
(Bloomberg) -- Singapore’s property managers are accelerating their push abroad as a slow reopening and diminishing returns at home force them to look for growth opportunities elsewhere.
Foreign acquisitions by real estate investment trusts in the city-state jumped to an all-time high of 61 last year, data compiled by Bloomberg show. The total value of such deals also more than doubled from 2020 to $12.3 billion.
Property managers in Singapore -- which boasts the most REITs in Asia outside of Japan -- have long shown global ambitions, with overseas investments picking up during the pandemic. But a limited reopening coupled with the anticipated omicron surge is adding impetus to this drive, even as investor concerns over a slowing recovery grow.
“Singapore’s commercial REITs may continue to rely on overseas M&A to achieve income growth in 2022, especially if omicron brings more uncertainty on further easing of social and traveling curbs to boost retail and office leasing demand in the country,” said Bloomberg Intelligence analyst Patrick Wong.
A $3.1 billion merger of Mapletree Commercial Trust with Mapletree North Asia Commercial Trust proposed last month is the latest in a series of moves that have seen managers long comfortable with a domestic presence favor a more global footprint. Also in December, another REIT targeting retail outlets in the city-state, CapitaLand Integrated Commercial Trust, made a foray into its second overseas market with office acquisitions in Australia.
Investors like the stability a local focus can offer, Sharon Lim, the chief executive officer of the manager of Mapletree Commercial to told reporters last month, but her trust needs to be better placed to take on new opportunities overseas and achieve “meaningful long-term expansion.” Lim’s REIT, which she described as the “last of the Mohicans” with only Singapore-centric assets will see its domestic holdings shrink to 51% within the new merged entity.
Increased Risks
Overseas diversification may alienate some investors, however, with Mapletree Commercial’s shares having declined more than 8% since the merger was announced. “Investors whose mandate demands only Singapore exposure may look at other counters,” said Krishna Guha, a senior analyst at Jefferies Financial Group Inc, adding that execution and foreign exchange risks may rise.
Still, while the CEO of Singapore’s tourism board Keith Tan has warned that a full recovery in visitor numbers is unlikely until 2025, a reopening dividend might yet emerge. Officials in the financial center have affirmed their determination to live with the virus and keep its borders open, while easing some restrictions, including allowing some workers back into offices.
Singapore’s latest property investment manager Capitaland Investment Ltd. -- a spinoff of one of the country’s largest developers -- said it will remain committed to local investments despite a growing foreign portfolio.
Singapore will continue to be a “core market” and is attracting strong interest from wealthy individuals, including a growing number of family offices, said CEO Lee Chee Koon in an emailed response to questions about its plans. “But given the physical growth constraints, the relative size of our Singapore business within our portfolio will become smaller over time, as we expand and deepen our interests in overseas markets.”
Investors have validated this strategy so far, with Capitaland Investment emerging as the second-best performer on the benchmark Straits Times Index since its trading debut in September last year, having advanced by over 21%.
The overseas growth fervor is unlikely to dim. A limited pool of good quality assets as well as increasing competition from global funds have also pushed yields lower, said Vijay Natarajan, a real estate analyst at RHB Research Institute. Capitaland’s Lee also expects stronger Asian-based competition to emerge over time.
Instead, deep liquidity pools in overseas markets like the U.K., U.S. and Australia, as well as more alluring freehold and longer lease terms will maintain the draw of markets abroad, said Natarajan. “We expect this trend of overseas acquisitions to continue.”
Footnotes to second chart:
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