Real Estate Overtakes Commodities as Top Sovereign Asset

Real Estate Overtakes Commodities as Top Sovereign Asset (Bloomberg)

Real estate topped the list of sovereign wealth funds’ investments last year, overtaking commodities and financial services, according to Institutional Investor’s Sovereign Wealth Center.

Properties made up 26 percent of investments by these funds last year, up from 14 percent in 2011, according to the center’s report on investment trends by the funds released today. That’s followed by financial services and commodities, each accounting for 23 percent, down from about 30 percent a year earlier, it said.

State funds have increased investments in alternative assets including real estate and private equity after monetary policy easing lowered the prospects for bond returns and added to the volatility of stocks. They are expected to add more of these holdings in 2013, Victoria Barbary, director at the Sovereign Wealth Center, said in an e-mail.

“Sovereign wealth funds will continue to diversify their portfolios into so-called alternative assets, responding to macroeconomic risks by adopting niche alternative strategies and making small adjustments to their asset allocations,” Barbary said. The asset composition in 2013 will be similar to last year and the investment trend is a “new normal” for these funds, she added.

Sovereign wealth funds had sought out assets in developed markets last year, especially commercial properties in London and Paris, according to the report.

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Luxury Home Prices Drop in Singapore and Hong Kong on Cooling Measures

Luxury Home Prices Drop in Singapore and Hong Kong on Cooling Measures (RealtyToday.com)

Luxury home prices dropped in Singapore and Hong Kong on strong property curbs making them the only two Asian markets that witnessed price declines in the sector, according to recent reports released by property services firm, Jones Lang LaSalle.

The report analyzed nine major property markets in the Asian region including Indonesia, Singapore, Hong Kong and China. The study found that high-end property prices rose in seven out of the nine markets except for Hong Kong and Singapore.

On an average, capital values were up 2.2 percent in the seven markets for the first quarter of 2013 when compared to the previous quarter. Values also spiked 6.1 percent in 2013 when compared to a year ago.

Jakarta witnessed the highest price hike with 8.7 percent increase while Kuala Lumpur came in second with a 6 percent hike. Prices in Beijing rose 2.4 percent and in Shanghai they were up 1.8 percent. However, Singapore and Hong Kong both saw a decline due to stringent government measures. While prices were down 1.1 percent quarter on quarter for Hong Kong, Singapore prices dipped 0.6 percent for the same period.

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Ayala Land Premier pushes ahead

Ayala Land Premier pushes ahead (Property Report)

The luxury arm of Philippines’ property development giant, Ayala Land recently announced that it will launch an astonishing 18 projects this year in a bid to reach double-digit growth on the wave of the country’s current property boom.

The Philippines’ main news channel abs-cbn spoke to the head of ALP, Jose Juan Jugo, about the company’s impressive sales record in the last three years, which he confirmed added up to 20 percent growth year-on year.

Jugo also said that he does not expect a slowdown in sales for 2013, even taking into account an increase in new launches from last year, which saw ALP bring 15 residential projects to the market.

ALP ended 2012 with earnings totalling P2.3 billion (U$56 million) and sales take up totalling P25 billion (US$615 million) over the last three years.

This year’s launches have already included the Luscara in Nuvali township project, located in South Luzon, with P2.9 billion (US$71 million) worth of lots already sold. Other projects include Ayala Westgrove Heights, with properties set around an orchard park and Ayala Greenfield Estates, to be built around a 350-hectare development that serves as the habitat of 35 species and 21 families of endemic and migratory birds.

Despite being Asia’s fastest-growing economy after China; World Bank data shows that The Philippines draws the lowest level of foreign direct investment in Southeast Asia, relying instead on regular remittances from Overseas Filipino Workers.

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Weak Yen Helps Push High-End Real Estate Sales

Weak Yen Helps Push High-End Real Estate Sales (The Wall Street Journal)

While a lot of excitement over a weakening yen has been focused on the boost it may give to Japan’s exports, in Tokyo, the depreciating currency may be acting as a tailwind for a quiet boom in high-end private real estate.

According to Tokyu Land Corp., Japan’s fourth-largest real estate group, investors from other countries in Asia have been increasing their purchases of high-end real estate in Japan’s capital since the start of the year.

“We’ve especially seen a rise in investors from Singapore,” Takumi Mochizuki, a Tokyu Land spokesman, told JRT last week.

High-end properties in districts such as Roppongi – where many foreign financial corporations are headquartered – are especially popular, Mr. Mochizuki said.

“For outside investors, these properties have essentially become 30% cheaper,” said Mr. Mochizuki, referring to the 27% drop of the yen versus the dollar since November last year. That drop has been precipitated by the aggressive anti-deflation policies of Prime Minister Shinzo Abe — and in particular his push for a dramatic increase in the amount of cash the central bank pumps into the economy, a measure that generally has the added effect of decreasing the value of the currency.

The dollar has been appreciating strongly against the yen since the middle of November last year, and last week rose to 100 yen for the first time in 4 years and one month.

The Japan branch of Jones Lang LaSalle JLL -0.75%, a global realty corporation, also said that high-end domestic property aimed at affluent individuals from abroad is selling well.

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