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Singapore investors tipped to increase with new trade ties

by October 15, 2016 General

The strengthening of ties with the new Singapore-Australia Free Trade Agreement (SAFTA) will prove a bonanza for commercial property, according to experts.

Singaporean companies including Keppel REIT, Suntec REIT and Frasers Centrepoint are well established in the market and own a range of high-profile assets across the country, including the Sofitel Sydney Wentworth hotel and Novotel Melbourne on Collins, which are owned by Frasers Centrepoint.

Singapore-listed Ascendas REIT has signalled its desire to expand in Australia, buying properties in Sydney and Melbourne in deals worth $168 million, and indicating it would like more assets.

JLL negotiated the sale of a business park at 197-201 Coward Street, Mascot, in Sydney, for $143.4 million to Ascendas on behalf of Frasers Property Group.

JLL’s head of office investment Australia, Rob Sewell, said the lower transaction volumes this year are not a symptom of reduced interest – investor demand remains strong.

The new agreement is expected to trigger a new wave of cash inflows.

Under the scheme Australia will raise the Foreign Investment Review Board screening threshold for private Singaporean investment in non-sensitive sectors from $252 million to $1094 million.

According to Cushman and Wakefield’s latest report, following a slow start to 2016 foreign investment rebounded strongly in the third quarter of 2016 to $4.9 billion.

The report says Asia-Pacific investors dominated the quarter, with China-based entities and Singapore-based entities accounting for $1.7 billion and $1.3 billion respectively.

The head of commercial real estate, HSBC Australia, Dan McLean, said the increase of the FIRB screening threshold to $1.1 billion will provide greater impetus for Singaporean investors to consider Australian commercial real estate.

“Singapore is already Australia’s second-largest commercial property investor accounting for 30 per cent of Australia’s total foreign direct investment stock in the sector,” Mr McLean said.

“The agreement will only make Australia even more compelling for Singaporean investors already attracted to the stability and yields the commercial property market offers.”

Mr McLean said Australia’s reputation as a good place to do business was already driving continued positive sentiment among Singaporean investors for commercial property.

“Now we seeing significant opportunities for joint ventures between Singaporean and domestic investors, with appetite strong on both sides,” he said.

“This example of overseas collaboration represents mutual benefits for both Australian and Singaporean parties, as domestic investors can release capital and maintain a regular income, while foreign investors can access a share of a prime commercial property.”