SINGAPORE, Aug 27 — Lured by Singapore’s political stability and relatively strong office rentals, Hong Kong investors ploughed US$1.4 billion (RM5.9 billion) into the Republic’s commercial property market in the first of 2019 — making it the top destination for these investors, a report showed today.

The report by real estate services firm Cushman and Wakefield said the investments into the United States and the United Kingdom, which are traditionally favoured by Hong Kong investors, have “remained quiet” as trade friction and the uncertainty over Brexit wears on those countries.

It added that the unrest in Hong Kong has also seen increased interest among commercial property investors there in putting their money in Singapore.

Christine Li, head of research in Singapore and South-east Asia at Cushman and Wakefield, noted that some of the Hong Kong investors and funds have been in Singapore for some time. “But the advent of the political situation in Hong Kong has coincided with more high-net-worth-individuals and family offices from Hong Kong enquiring on potential purchases,” she said.

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James Shepherd, Cushman and Wakefield’s Asia-Pacific research head, added that in the eyes of Hong Kong investors, Singapore “may increasingly be viewed as a comparatively safe haven given the challenges some other global destinations are facing”.

In Singapore, the value of transactions by Hong Kong investors in the Republic’s commercial real estate grew, totalling US$3 billion this year to date, said the Cushman and Wakefield report.

The biggest deals by Hong Kong investors in 2019 involved Gaw Capital Partners, which is run by Hong Kong investment guru Goodwin Gaw. In February, it poured US$510 million into the purchase of Robinson 77, an office skyscraper in Tanjong Pagar.

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Gaw Capital also led a consortium in a US$1.1 billion effort to buy office and retail space in Duo, an integrated development in Bugis owned by a joint venture of sovereign wealth funds — Singapore’s Temasek and Malaysia’s Khazanah Nasional.

Another Hong Kong investor, a boutique real estate investment fund Arch Capital Management, bought Anson House — which is also in Tanjong Pagar — for US$151 million earlier this month.

Separately, Chinatown Point Mall was acquired for S$520 million by Pan Asia Realty Advisors, a joint venture between Mitsubishi Estate and Hong Kong-headquartered CLSA Capital.

Property analyst Ong Kah Seng told TODAY that these investments are unlikely to be short-term substitutes that arose from the social unrest in Hong Kong, because such an investment approach “will never work out”.

“High-end and savvy property investors, especially those from Hong Kong, would have done their strategic sums and increasingly prefer Singapore properties,” said Ong.

The difference now is that “this critical period stimulates their investment decision”, notwithstanding the significant levies required for foreigners buying Singapore residential property, Ong added.

He said: “Viewed in totality, the additional price of additional stamp duties paid is nevertheless well worth the betterment price that Hong Kong investors strategically pay to enjoy stability and predictability of property prices in Singapore.”

The report comes amid escalating social unrest for the 12th straight week in the special administrative region, with the police deploying water cannons and firing a warning gun shot for the first time on Sunday.

The anti-extradition protests, which have evolved into a wider movement, is expected to continue over the weekend.

Today, Hong Kong’s Beijing-backed leader Carrie Lam publicly called for an end to the chaos and privately met up with youths to discuss a way forward. The Hong Kong economy, which is already teetering from the ongoing trade war, now faces its first recession in a decade as the protests exact an economic toll on the semi-autonomous state.

Chinese e-commerce giant Alibaba was set to list in Hong Kong later this month, but has postponed what was touted as the world’s biggest equity deal, reported several media outlets. Hong Kong’s banks are issuing unprecedented profit warnings, while hotels and restaurants are half-empty. Several global events have been postponed and economists say retail sales could drop by 20 per cent to 30 per cent this year, said Reuters. — TODAY