ALTERNATIVE INVESTMENT | Staff Reporter, Singapore

Spiking interest rates feared to dampen demand from Asian investors

But cash-rich end-users could save the day.

The United States has emerged as the most desirable destination among global investors, despite recent political turmoil and economic uncertainty, according to a just released report from Colliers International.

Overall, the new Global Investor Sentiment Survey found optimism about the economic outlook for 2014, and with this increased confidence, many investors are planning to expand, especially in “safe-haven” cities around the world.

Meanwhile in Asia, most Asian investors surveyed (62%) believe Asia’s property markets will improve over the next twelve months.

However, comparing with 41% of Asian investors thinking investment volumes in the region to increase over 10% during 2013 in the previous survey, 41% of them in the latest survey believe the volumes to increase between 1% and 10% in 2014.

The more conservative attitude of Asian investors is in line with concerns that interest rates may rise, according to Terence Tang, Managing Director of Capital Markets & Investment Services, Asia at Colliers International.

Tang added, “In Hong Kong and Singapore, the introduction of various government cooling measures in both the residential and commercial sectors during 1Q 2013 dampened investment demand in these markets.

However, some selective investment transactions showed that cash-rich end-users remained active in the sales market to hedge against rental volatility.”

According to the views of Asian investors surveyed, they believe capital to continue to flow into Asia, which is where the growth is.

However, the liquidity inflow may not be as strong as 2013 as risk aversion is likely the concern of Asian investors over the year ahead amid worries about an end of the current low interest rate environment around 2015.

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