Poms' investments bloom

THE United Kingdom's New Star International Property Fund jaunt into Asia and Australia has paid strong dividends.

Since launch, the New Star International Property Fund has been actively seeking assets in the Asia Pacific region, buying a swag of properties including P&O House at 160 Sussex Street in Sydney’s CBD and a Bulgari store at 64 Castlereagh St also in Sydney’s CBD.

So far, the fund’s investment in Sydney would have witnessed a 10.2% increase in year on year rent.

But that pales to Singapore and Manila, where year on year rents rose 53.6% and 38.2% respectively.

New Star’s head of property fund management Roger Dossett said with economic prospects strong and investor confidence growing, Asia has become an attractive centre for prime property investment.

“With sustained growth and a positive economic outlook, Asia is well positioned to generate healthy returns for investors in the New Star International Property Fund.

“Strong forecasted economic growth, high levels of demand and low levels of expected supply to drive Singapore, Japan, Hong Kong and broader Asian commercial property markets,” he added.

Dossett said strong rental growth is forecast to continue in these markets as a scarcity of supply and high levels of demand drive rents higher.

According to CB Richard Ellis, the direct commercial property market in Asia remains brisk, with both the number and value of purchases by overseas investors increasing.

Dossett said New Star is well placed to exploit this strong forecasted rental growth having recently purchased the Parakuo building in Singapore’s CBD.

CBRE research shows Grade A occupancy rates in Singapore have reached a peak of 99.5% and is forecast that over the next six years (2007-2012), annual average supply is expected to be 1.25 million sq ft, considerably lower than the previous 10-year average of 1.53 million sq ft.

At the same time, Singapore’s Gross domestic product is forecast to grow 7.7 % this year, well above the past 10-year average of 5.15%.

“As a result, prospects look attractive for property owners in this core market,” Dossett said.

In other regions, in the first half of 2007, the average capital value of prime property in Hong Kong rose 8%.

With GDP increasing from 5.7% in the first quarter of 2007 to an estimated 6.9% in the second quarter of 2007, the outlook for Hong Kong is also attractive.

But Dossett said prospects for Japan are arguably even more attractive because Japan is at an earlier stage in its property cycle.

“The country’s expected economic resurgence makes it an attractive centre for investment, with key cities, where land is at a premium, such as Tokyo and Osaka, set to benefit.

“The broader Asia Pacific region has benefited from this strong growth in Central Asia. New Zealand’s property market for example has been resilient, with rents rising, yields firming and vacancy rates falling. Office vacancies in Auckland’s Central Business District are now at the lowest level since the 1980s.

“New Star has recently acquired a further three prime buildings in Japan and is actively seeking further assets to purchase in the Asia Pacific region,” he concluded.

Australian Property Journal