Southeast Asian Properties Are Attractive, Deutsche Bank Says – Bloomberg 09-27-12

Salient to Investors:

Leslie Chua at Deutsche Bank says:

  • Retail real estate and logistics facilities in Southeast Asian cities, including Bangkok, Jakarta and Kuala Lumpur, are attractive and office markets in Sydney and Melbourne are attractive because of a lack of supply.
  • Investors are caught between a rock and a hard place – the need to be risk averse and the volatility in equities and bonds – so have to go up the risk curve, typically to hard assets like real estate.
  • Yield spreads between real estate assets and government bonds are attractive – for Singapore office markets a range of 2-3 percent above sovereign debt; for retail a range of 2-4 percent; for industrial space between 2.5 – 4 percent.
  • Low borrowing costs, which will remain low, and stable yields make for a very good form of alternate investment.
  • Indonesia, Malaysia and Thailand have got their act in order and transparency has improved – is cautiously optimistic on Singapore office market because supply of new office space remains limited.
  • Southeast Asia has often been ignored largely because of a lack of transparency – for a new investor in the region, Australia, Singapore and Japan are a natural choice.

Sigrid Zialcita at Cushman & Wakefield revised its forecast for a drop in Singapore office rents to 6 percent this year from 15 percent on June 29.

The IMF says Indonesia, Thailand, Philippines, Malaysia, Vietnam, China and India will outpace the rest of the world over the next two years.

Read the full article at http://www.bloomberg.com/news/2012-09-28/southeast-asian-properties-are-attractive-deutsche-bank-says.html