Property market 'attractive despite slowing growth'

GROWTH in the Singapore property market is expected to slow this year, according to LaSalle Investment Management.

However, the global property fund manager has a 'buy' call on the Singapore market as it remains attractive and there are still opportunities to tap, said Mr David Edwards, its regional director.

'The economic performance in Singapore is really gathering momentum. The potential for a slowdown in external demand is there...but core expectations are for relatively good growth in the United States and therefore the situation in Singapore looks good,' said Mr Edwards.

LaSalle, which manages about US$40 billion (S$61.1 billion) worth of assets around the world, is particularly bullish on the local office sector, given corporate expansion and tight supply.

There is also room for growth in the residential market, with middle-

tier properties likely to see the trickle-down effect this year of the luxury segment's runaway prices.

Mr Edwards said that despite rising prices, he does not believe a bubble is forming, indicating that the underlying fundamentals are strong.

The group is also keen on the hotel sector as tourism is expected to benefit from the upcoming casinos.

An associate company, LaSalle LAO Singapore, recently won a tender for a hotel site in Bencoolen Street with a bid of $73 million.

Mr Edwards also revealed yesterday that the group is in the midst of clinching another hotel property deal in Singapore but declined to give further details.

LaSalle said in the report, its 13th in an annual series, that the outlook for the Asia-Pacific is favourable for this year and the next, thanks to the region's growing economies.

The group is overweight on Japan, where it says that the economic recovery is under way, and business expansion and investment are driving office demand and rental growth.

A shortage of modern office space and shopping centres in North Asia, including Japan and China, may bring healthy returns.

The report also highlights the need to move into less traditional asset classes such as modern warehouses, which are driven by burgeoning trade, as well as venture into new geographical regions, such as Mexico, to find increased value.

One potential area of interest for investors are real estate investment trusts launched in established markets such as Singapore, Tokyo or Hong Kong that tap emerging markets and asset classes, said Mr Edwards.