Singapore rated the region's most promising market

Of 20 Asian cities listed in the study, Singapore leapt four places to become the No1 real estate investment destination while Shanghai dropped to second place from first in the previous annual survey. Mumbai climbed to third spot from last year's eighth, and Hong Kong slumped to fourth.

The annual investor survey - Emerging Trends in Real Estate Asia-Pacific - published by global non-profit education and research institute Urban Land Institute and PricewaterhouseCoopers, is based on the opinions of more than 280 investors, developers, property company representatives, lenders, brokers and consultants.

Leung Chun-ying, the Asia-Pacific chairman of the institute, said Hong Kong fell partly because respondents believed other cities had greater upside potential given Hong Kong's recent property boom. In a bid to rein in rampant home price inflation, the government last month took steps, including introducing additional stamp duty, to curb speculation after seeing residential prices jump 18 per cent since the beginning of the year.

Leung said the opinion survey was conducted before the government introduced the measures on November 20.

Transactions in the residential market plunged more than 50 per cent immediately after the government unveiled the package. "Investors will probably go to other cities offering better opportunities," he said, adding that the survey should not be considered as showing that Hong Kong has lost its competitiveness.

He said the government measures were proving effective in curbing speculation but would not dampen foreign investor interest in Hong Kong because they "took a long-term view".

More than 38 per cent of those surveyed believed it was time to buy Hong Kong retail properties while 20 per cent opted for residential properties. "We like retail in Hong Kong but plan to step out of the prime markets and into suburban locations," one interviewee said.

Fifty-one per cent of respondents believed that a hold strategy for office space was the correct one for next year. One respondent, however, said: "The leasing activity looks to continue upward in the coming year, and rents should get better as well."

Singapore topped the rankings because of the country's strong economic growth and brisk activity in the financial and hi-tech industries. "Singapore is a market that has survived the economic fall and currently offers investors many opportunities," one investor said.

Shanghai dropped to second as the city saw sharp increases in property prices, dampening some investor interest. Respondents said rising values might lessen interest in Shanghai property investment.

The survey said 54 per cent of respondents believed it was time to buy retail property in Shanghai, while 34 per cent were interested in offices. - SCMP