Investors turning to commercial properties

20130312-st-investors-turning-to-commercial-property-pic RESTRICTIVE government measures and a fear of inflation are prompting investors to shift from residential to commercial properties.

Research carried out by property consultancy firm Knight Frank showed that the value of transactions in the commercial property market has increased three times over the past four years.

This is in line with a global trend where more high net worth individuals (HNWIs) are investing in commercial property, according to Knight Frank's annual Wealth Report.

Said Nicholas Holt, regional head of research of Knight Frank Asia-Pacific: "In Hong Kong and Singapore, particularly, we are seeing more private investors who previously favoured residential investment looking at lower price point commercial property."

While the latest round of cooling measures implemented by the government in January increased the amount of tax payable for transactions in the residential and industrial markets, there were no further restrictions imposed on the commercial property market. "Cooling measures have generated more interest in 'strata' commercial investments, where a commercial building is sold off in floors or sub-units that are affordable to private buyers," Mr Holt said.

Png Poh Soon, head of research for Knight Frank Singapore, said:

"As residential investments get more restrictive arising from cooling measures in Singapore, property investors are shifting their sights to yield-producing assets in the form of commercial properties to counter inflation."

That said, he does not believe that residential prices here will go down.

"We believe Singapore homes will be good (for) long-term investment as HNWIs continue to favour Singapore as a global city of choice," he said.

In the Asia-Pacific region, interest in commercial properties and a growing desire to diversify has resulted in more cross-border investment.

In Australia, the flow of capital from private investors in Asia was the second-largest inter-regional movement in 2012, according to research firm Real Capital Analytics.

"We expect Asian investors to continue to look for investment opportunities abroad," said Mr Holt.

Source: Business Times, 12 Mar 2013