Property investors are now “cautious and cautious” about deploying capital in the face of growing economic uncertainty around the world, said Singapore’s leading property investment manager CapitaLand Investments. rice field.
half year results on thursday CapitaLand Investments reported a 38% decline in profit to S$433 million ($316 million) in the first half of the year. Economy.
The company’s chief financial officer, Andrew Lim, said:squawk box asia” On Thursday.
“There is a lot of uncertainty there. We are seeing interest rates rise rapidly in many countries as a response and response to supply and demand side inflation. It wasn’t seen.”
“And I think a lot of real estate and capital managers pay a lot of attention to capital deployment and underwriting returns. because it is certain.”
Raffles City Mall operated by CapitaLand in Chongqing, China, 2019. Andrew Lim, chief financial officer of CapitaLand Investments, said the company remains committed to investing in Chinese real estate, even as earnings from Chinese properties have soared.
Shen Qilai | Bloomberg | Bloomberg | Getty Images
Mr Lim said corporate capital deployments this year should reach S$3 billion, a further “normalized” from S$11 billion last year.
Economists say one of the warning signs of a recession or recession is that investors are reluctant to put capital into new investments.
Oxford Economics said in its recession memo last month that declining investment is often the “major factor” in recessions.
Adam Slater, chief economist at Oxford Economics, said: “Even though investment averaged only 20% to 22% of GDP during recessions since the 1980s, the G7 gross domestic product About half of the decline in sales in the negative quarter was due to investment.” in a note.
“As a result, short-term trends in investment are particularly important given current concerns about a possible global recession.”
“An investment freeze in the next few quarters is a significant risk.”
While some indicators pointed to investment activity in the U.S., while Germany and Japan still looked strong, business sentiment about future growth in investment in those locations has weakened, Slater said. Stated.
He added that the willingness to invest in other economies such as China, the UK and South Korea is declining.
Other indicators of investment appetite, such as stock market strength, corporate liquidity and earnings, said Slater said that “a G7 investment freeze looks very real later this year.” shows.
But while a recession seems likely, Slater said a recession is avoidable.
As for China, CapitaLand Investment’s Lim said that while real estate revenues have soared, especially after major cities such as Shanghai were hit by pandemic lockdowns in the second quarter of this year, the company will continue to invest in China. He said he is investing in real estate.
In the first half of the year, the company’s returns from China suffered not only from delays in asset recycling, but also from having to extend rent rebates to retail facility tenants.
“I think the business and environment in China are slowly starting to normalize.
“We cannot become Asia’s leading real estate investment manager without investing heavily in China, and we will continue to be very constructive towards China in the long term.”