Pacific Star bullish on Asian retail property sector
KUALA LUMPUR: Pacific Star Holdings Pte Ltd, a real estate investment house, said it is bullish on the outlook for the Asian retail property sector this year.
It explained that with the weak US and European markets, more international retailers, lured by Asia's growing wealth and tourism potential, are now seeking to expand in Asia. It noted that Asian governments have been focusing on developing domestic demand from a structural perspective, which should bode well for the retail sector.
The company made the conclusion in its bi-annual Asian Property Outlook and Strategy report, which highlights its key investment themes in regional real estate markets. Included in the study were Kuala Lumpur, Bangkok, Beijing, Ho Chi Minh City, Hong Kong, Seoul, Shanghai, Singapore and Tokyo.
"The long-term Asian consumption story remains as strong as ever. While we have seen the short-term outlook affected by uncertainties in the global economy, the growth potential for the region remains. This is evident in the comments made by global fashion groups with regards to their expansion plans and the growth in earnings from the region. We expect this trend to continue and with it, the demand for innovative retail properties to meet the appetites of the growing Asian consumer," said vice president of research and strategic planning Lam Chern Woon.
"The next few months could present investors with an attractive window to capitalise on the soft but temporary market conditions. Prime retail rents may soften in Tier 1 markets, but there is no denying that the longer-term fundamentals are compelling," he added.
The report revealed that annual returns from investing in stable retail properties in Singapore, Hong Kong and Kuala Lumpur are likely to be in the low teens, driven by new tourist attractions.
While the company is optimistic on the outlook for the Asian retail property market, it expects the office sector to be hit by hiring headwinds due to the fallout from the European debt crisis.
On the residential front, Pacific Star expects policy tightening to tail off. In most residential markets in Asia, the effects of earlier property cooling measures have begun to impact sales adversely, which has translates into lower home prices in Hong Kong and some Chinese cities. Mortgage rates across Asia have started to creep up over the past few months with a detrimental impact on housing affordability.
Despite the economic headwinds and policy tightening of the last few quarters, Pacific Star expects upgrading demand to be strong in suburban residential markets in Singapore, Bangkok and Kuala Lumpur, supported by healthy employment conditions and affordability. Bernama