SINGAPORE: Pacific Star Group, one of Asia's leading real estate investment houses, says commercial properties in Asia will continue to do well in the second half of 2011.
Within the commercial sector, its top pick is retail real estate, while the top three destinations in the region for retail property investment are Hong Kong, Singapore and Kuala Lumpur.
The group's senior vice-president and head of research and strategic planning Leslie Chua said Hong Kong was supported by tourist spending especially from outbound mainland Chinese visitors.
“Singapore likewise is enjoying a surge in visitors attracted especially to its integrated resorts.
“Over in Malaysia, domestic factors are at play. Strong wage growth and positive retail sentiment have boosted retail spending and real estate fundamentals in Kuala Lumpur,” he said, commenting on the group's biannual Asia Property Outlook and Strategy report here yesterday.
According to the report which highlights its key investment themes in regional real estate markets, the shine of Asian real estate environment continues despite greater global uncertainty, as it is supported by favourable economic fundamentals and positive consumer sentiment in most markets.
It says capital values have risen on the back of solid rental growth as regional economies continue their strong expansion, and the economic recovery in the region is moderating to a more sustainable rate which should provide steady support for Asian real estate.
The key factors supporting retail properties are tightening employment conditions, which are driving buoyant retail spending, and rising tourism inflows to Asia, which are becoming an important source of revenues for some cities.
After retail, the group favours office properties, as the region's rapid economic growth is fueling a steady upturn in the office sector.
Demand for office space in Asia has been driven mainly by corporate expansions, upgrading as well as relocations with financial, insurance, real estate and information technology tenants leading the way.
Pacific Star's top destination for office property investment is Singapore. Singapore continues to exhibit strong fundamentals in several key drivers including services outlook, political stability, and ease of doing business.
Although fundamentals for Asian residential real estate remain intact, the group is less sanguine on the residential sector citing a disproportionate amount of policy risk and rising interest rates as the key threats.
Taking into consideration loan structures, incomes and home prices, the group expects home buyers in Seoul and Ho Chi Minh to be the hardest hit in the region.
It says Kuala Lumpur will be least affected because policy risk is relatively low and economic conditions are generally healthy.
The biannual Pacific Star Asia Property Outlook and Strategy report surveys Bangkok, Beijing, Ho Chi Minh, Hong Kong, Kuala Lumpur, Seoul, Shanghai, Singapore and Tokyo. Bernama