Singaporean firms have been buying up distressed properties, such as those in Indonesia and the United States in the aftermath of the worldwide recession. However, their prices are rising, and bargains are now fewer as the economy picks up.
One reason is the US central bank’s quantitative easing, which aims to pump several billions of dollars into the economy.
This has meant that companies and funds that are flush with liquidity are boosting the demand for distressed properties.
“There were more distressed assets for sale last year and early this year, but there are fewer now as the economy recovers, and fewer companies have to sell,” said Blossom Hing, director of corporate insolvency and restructuring at Drew & Napier. “There’s now also more cash chasing these assets due to the quantitative easing. Thus, the valuations have risen.”
“There has been a marked increase in the number of buyers looking for opportunities, but pricing of the distressed assets remains a concern. The number of concluded deals recently is limited. Those who are considering distressed assets overseas are approaching them with caution,” said Mr. Loh.
Julian Kwek, a corporate lawyer and head of the Indonesia desk at Drew & Napier, said valuations have generally jumped since the crisis by “50 percent to 60 percent easily”, adding that specific pricings would be dependent on several factors, such as the industry and country where the property is located.