Following is the transcript of a CNBC interview with John Fitzgerald, CEO, APAC of Urban Land Institute. The interview was broadcast on CNBC on 25 April 2017 at 06:45AM SG/HK Time, during CNBC's "Hong Kong versus Singapore" theme week.
All references must be sourced to a "CNBC Interview".
Interviewed by Akiko Fujita, Correspondent, CNBC and Dan Murphy, Correspondent, CNBC.
Akiko Fujita: Great to have you on this morning so let's put the question to you. What is the better investment, Singapore or Hong Kong?
John Fitzgerald: Well, you know it could go 'good morning and thanks for having me'. I mean you know in the greater context it's really…this is really a remarkable moment in time for cities around the world, the time where factors such as globalization, the shared economy, changing demographics and technology are really all sort of changing demographics and technology are really all sort of converging to really redefine the competition between cities and that competition is global. And that competition is for talent.
In the past, it's always been that cities, that the people have moved to where the jobs are. But we're now seeing a trend that the jobs are moving to where the talent is, to where the talent wants to be and I think within that context, we're seeing that cities that cater to people…the cities that are better for that, cater to people are the cities that are best positioned for the future.
So this is the context in which you know you sort of see the lens of Hong Kong and Singapore. And when it comes to the property markets and the residential property market in Hong Kong and Singapore. It's really, really not comparing apples to apples. The markets are both very different and a lot of that is as you can see from those figures and say home ownership, for instance, Singapore is a market with 90 percent of home ownership as opposed to 50 percent in Hong Kong.
So when you're comparing the figures, it's again, it's not apples to apples. In Singapore you're seeing people upgrade or buy, rather in Hong Kong, people are trying to get in on the property… the property ladder. So really when it comes to the…
Akiko: Let me ask you this because Dan (Murphy) pointed to the cooling measure that have been put in place here in Singapore. But we've seen similar measure in Hong Kong as well. Why do you think they've had success here in Singapore as opposed to where you are in Hong Kong right now?
Fitzgerald: Right, again part of it is again not comparing apples to apples but really I think it's really... supply and demand. It's market forces. So the cooling measures can have some limited impact but when it comes down to it, it's a supply and demand question when you have a limited supply and the demand is there. You know there's only limited impact that the cooling measures can have.
Dan Murphy: Hi John, Dan here. I just wanted to weigh in on the conversation and ask you, you know that analysts that I've been speaking to this week and the major property developers say they are seeing some revived interest in the market here in Singapore. But we still have a huge pipeline of assets, a huge pipeline of projects set to come online. That one project that we just previewed in that story is one of many still to hit the market. So do you think here in Singapore in particular, the fundamentals are still looking a little negative, we have excessive supply still set to dampen prices in the future perhaps?
Fitzgerald: Well, you know as far as in Singapore with the government managing supply, we have long term confidence in really… in both markets. We're talking about two great cities with where investors want to be. Annually, you align PwC collaborate on a report called Emerging Trends in Real Estate. Consistently in this report over the last 10 years, you know Hong Kong and Singapore are both markets where real estate investors want to be, where global investment wants to be because they're transparent. They have high quality legal systems, core assets, gateway cities. So again, the fundamentals in these markets for the long term, I think everybody believes in.
Dan: And one of the other interesting aspects of this is that we've seen a lot of big money from mainland Chines moving into Hong Kong and that's also been supporting asset prices there. I wanted to ask you about the fundamentals and the specifics for the real estate market when it comes to rentals as well. What's the outlook for yields in Hong Kong and in Singapore? And do you think that we'll see the rising supply and perhaps reduced demand also impacting yields more broadly?
Fitzgerald: Well, you there's a search…the capital is a search for yield globally, is a global capital search for yield and the Chinese investors are obviously the pool of capital that is contributing to the compressed co-operates in the yield equations in Hong Kong and Singapore and again fundamentally in the rental markets we see again long term strong fundamentals.
Akiko: John, I know we frame this in the context of Singapore versus Hong Kong but I wonder if there are other markets you're looking at in the region, whether that's Sydney or Bangkok or Jakarta. Any other opportunities you're seeing right now in terms of investments?
Fitzgerald: Well again, we're seeing as far as in terms of investment, our members through our collaboration with PwC in Emerging Trends Report, you know, this year really India is on the radar screen much more for global investors, So Mumbai, Delhi, Bangalore have really…have really come up on the radar screen for global investors. There's increase confidence in the markets, there's the belief that there's an opportunity for scale and there's a need through urbanization for a high quality development assets.
Dan: So John, final question. If you were to buy tomorrow, where would it be?
Fitzgerald: Well I live in Hong Kong so you know it would be right here in Hong Kong. But no we're at a …we're talking about two, again, two great cities with a real top high quality of life, great infrastructure, connectivity. You know, again global gateway cities, so again we're talking about two great markets that all global investors really want to... would really want to be.