European real estate

Singaporean investors are hot for the high returns available in European real estate

Singaporean investors are increasingly nimble in navigating European real estate and their almost exclusive focus on returns means they will consider a broad range of asset classes and brave a range of markets. Sovereign wealth funds have dominated investment outflows from Singapore in the past and continue to do so. That money is found in a broad range of vehicles and they are constantly on the hunt to invest in other markets.

Singapore itself is a small city-state and, with a relatively limited amount of assets in their home market, investors need to diversify. Yet interestingly there is also an increasing number of private investors coming into play, as well as a growing appetite from domestic retail investors.

Recent deals include the purchase by Frasers Centrepoint – one of Singapore’s largest listed companies – of a portfolio of four business parks in the UK covering 455,000 sq m for £686 million (€756 million). The deal sees Frasers Centrepoint, which acquired Geneba (owner of German and Dutch logistics and industrial assets) earlier this year, become responsible for around $4.2 billion (€2.61 billion) of assets in the UK and Europe.

Buyers who have invested all over Asia are now seeing the return differential between Asia and Europe narrowing, compared with five or 10 years ago when Europe was not a primary focus for the majority of Singapore investors.  Singaporean groups are now one of the more sophisticated Far East investors in Europe, although they are following a trail initially blazed by sovereign wealth fund GIC many years ago.

Deals which demonstrate the drive to find returns include Keppel Data Centre (DC) REIT acquiring its second data centre in Dublin for €66 million, AT Capital (part of a consortium – with Dutch construction firm Royal BAM Group’s property arm AM, and Amsterdam-based Cairn Real Estate) acquiring the former Bijlmer prison in Amsterdam for €84 million and Singapore-listed First Sponsor becoming one of the largest hotel owners in the Netherlands this summer after agreeing to acquire 17 assets operated by the Bilderberg hotel chain.

These investors understand that the days of just focusing on offices in London is gone, and as all overseas investors often operate with something of a herd mentality, we can see it translating into Singaporean investors now looking further afield. Even if Chinese investment volumes do become more subdued in Europe –  and there is no sign of this yet – increasing volumes from Singapore, and investment flows from funds in other markets, give us reason to believe the investment market will remain strong.

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